Climate change could render assets ‘worthless’, Bank of England governor warns
Financial sector ‘not moving fast enough’ to divest from fossil fuels, Mark Carney says
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Climate breakdown could render investments held by millions of people “worthless”, the outgoing governor of the Bank of England has warned.
Mark Carney suggested the financial sector had not yet woken up to the looming crisis and was “not moving fast enough” to divest from fossil fuels.
Mr Carney – who will become the UN’s special envoy for climate action and finance in February 2020 – made the comments to the BBC’s Today programme for a segment guest-edited by Greta Thunberg and to be broadcast on Monday.
Asked whether pension funds should divest from fossil fuels even if the returns currently appear attractive, he said: “Well that hasn’t been the case, but they could make that argument.
“They need to make the argument – to be clear about why is that going to be the case if a substantial proportion of those assets are going to be worthless.”
“If we were to burn all those oil and gases there’s no way we would meet carbon budgets. Up to 80 per cent of coal assets will be stranded, [and] up to half of developed oil reserves.”
England’s central bank has previously suggested that while £16tn of assets could be wiped out by climate change, companies at the forefront of efforts to curb emissions could be handsomely rewarded.
“There will be industries, sectors and firms that do very well during this process because they will be part of the solution,” he told The Guardian in October. “But there will also be ones that lag behind, and they will be punished.”
Speaking to the BBC, Mr Carney said companies “have to make the judgment and justify to the people whose money it ultimately is” in relation to divestment.
“A question for every company, every financial institution, every asset manager, pension fund or insurer – what’s your plan?” he added.
Earlier this month, the Bank of England announced it would become the first central bank to conduct comprehensive tests on how well the financial system could withstand the risks posed by climate change.
Under the ambitious new plans, Britain’s largest lenders and insurers would undergo climate stress tests on their trillions of pounds of assets, similar to the financial stress tests they must already pass.
Mr Carney described climate change as a “tragedy on the horizon” and warned there would be “more extreme weather events”, but that “by the time that the extreme events become so prevalent and so obvious it will be too late to do anything about it”.
“We look to political leaders to start addressing future problems today,” he said.
Additional reporting by PA
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments