The governor of the Bank of England delivered a damning assessment of the threat climate change poses to the global financial system in a speech on Tuesday evening. He also warned that fossil fuel companies face “huge” losses should regulations to curb rising temperatures leave their reserves “unburnable” and that weather-related loss events for insurers have tripled since the 1980s.
Stating that "it may already be too late" to mitigate the effects of severe weather on long-term financial stability, Carney said investors in the fossil fuel industry were exposed should stringent climate action be adopted.
Speaking to business leaders at a Lloyd’s insurance event in London, the Canadian economist said that the effects of climate change presented “profound environmental and social challenges” to the world’s societies. “The combination of the weight of scientific evidence and the dynamics of the financial system suggest that, in the fullness of time, climate change will threaten financial resilience and longer-term prosperity,” he said.
“While there is still time to act, the window of opportunity is finite and shrinking,” he warned, adding: “The challenges currently posed by climate change pale in significance compared with what might come.” Carney said the current generation has little incentive to address the problems of future generations: "In other words, once climate change becomes a defining issue for financial stability, it may already be too late."
The 50-year-old went on: “The far-sighted amongst you are anticipating broader global impacts on property, migration and political stability, as well as food and water security. So why isn't more being done to address it?" He concluded that the short-term “horizon for monetary policy” was unable to cope with the long-term issue.
Responding to the address, Barry Gardiner, Labour's shadow energy and climate change minister, said Carney’s address “must be treated as an urgent call to action,” adding that the Government should stop undermining low carbon technologies like solar and onshore wind.
Last week, Pope Francis called for a "courageous and responsible effort" to combat the man-made “environmental challenge” during a speech to a joint meeting of the US Congress.