Mark Carney warns global banks of looming losses from climate change

Mark Carney told the financial sector not to ignore climate change, warning of the losses that it might trigger, including from lenders' stakes in polluting firms.

Writing in The Guardian on Wednesday alongside his opposite number from France, the Governor of the Bank of England said an urgent reform of the global financial system was needed and called on it to “raise the bar”.

Large amounts of capital should be relocated to help counter climate change and “if some companies and industries fail to adjust to this new world, they will fail to exist.”

“As financial policymakers and prudential supervisors we cannot ignore the obvious physical risks before our eyes. Climate change is a global problem, which requires global solutions, in which the whole financial sector has a central role to play.”

They also urged other financial regulators to carry out climate change stress tests and called on policymakers around the world to work together.

Their warning came the day after thousands took part in protests across London organised by Extinction Rebellion with strikes by schoolchildren staged across the world to calling on governments to put a stop to the problem.

According to The Guardian, banks could find they have stranded assets that turn out to be worthless if they are reliant on burning fossil fuels.

Network for Greening the Financial System (NGFS) chair Frank Elderson issued a similarly stark warning in The Guardian.

Elderson provided a series of recommendations on the role which the financial services industry should play in achieving a low-carbon economy.

He said firms must integrate the monitoring of climate-related financial risks into day-to-day supervisory work and central banks should integrate sustainability into their portfolio management.