Daily Management Review

Are We ‘Spending Another Decade Doing Worthy Things But Not Enough’?


Financial market is not fast enough to reduce investments on fossils fuels, says Carney.

Source: flickr.com; © Jin Lee, Bloomberg; (CC BY-ND 2.0)
Source: flickr.com; © Jin Lee, Bloomberg; (CC BY-ND 2.0)
During an interview, the Bank of England’s Governor, Mark Carney said that the pace of financial services have been “too slow” for cutting down on investment in fossil fuels. Carney is scheduled to step down from BoE in the coming year to take a place in the UN’s special envoy dedicated to climate change.
According to Carney due to global warming “many financial companies” will find their assets losing their value. Citing the analysis of pension fund, Carney stated that corporate policies indicate a global warming of “3.7 to 3.8 degrees Celsius” whereas the Paris Agreement had set a target of “1.5-degree”.
In Carney’s words:
“The concern is whether we will spend another decade doing worthy things but not enough... and we will blow through the 1.5C mark very quickly”.
“As a consequence, the climate will stabilize at the much higher level.”
Although, the finance market has come a long way in transparency when it comes to “disclosing the risks to their assets from climate change”, yet the progress is not “fast enough” as desired, warned Carney. He also urged the political authorities to work towards positive change by avoiding “selective information and spin”. Carney said:
“To deliver, there needs to be shared understanding about what’s necessary. [But] it is reasonable for there to be debates at the margin about where does the role of the state stop and what’s the role of markets”.
Carney thinks that there needs to be an amalgam of “public investment” as well as change led by finance markets as they possess a power of reflecting judgements about “the future value of assets” in an environment concerned by climate change.
As per Reuters:
“Earlier this month, the BoE said Britain’s top banks and insurers should be tested together for the first time in 2021 to quantify the potential financial damage from climate change on their businesses”.