Bank of England links climate change to financial crises
The $50 billion in weather-related losses over the last decade "pale in significance" to what might come, the bank's governor warns.
The Bank of England governor, Mark Carney, has given a stark warning that climate change poses a huge risk to global stability.
At a meeting of leading insurers at Lloyd's of London, Carney said that climate change will lead to financial crises and falling living standards unless the world’s leading countries do more to ensure that their companies come clean about their current and future carbon emissions.
He pointed out the rapid increase in weather-related catastrophes, and the jump in both physical and financial costs.
The governor said that proposals probably would be put to the G20 meeting in Turkey in November, urging the world’s leading developed and developing countries to bring in tougher corporate disclosure standards so that investors could better judge climate change risks.
Once climate change becomes a defining issue for financial stability, it could already be too late.
The governor, who is chairman of the Financial Stability Board, the international body set up by the G20 in 2009 to monitor risks to the financial system, said losses would be higher than expected if recent weather events proved to be the new normal.
Carney said the challenges currently posed by climate change "pale in significance compared with what might come," and that this generation had little incentive to avert future problems.
He avoided saying what was causing this change, but said evidence was mounting of man's role in climate change.
Mounting losses
Insurers are among those with the biggest interest in climate change. The syndicates operating at Lloyd's, the world's oldest insurance market, are the most exposed to disasters such as hurricanes and floods.
“Since the 1980s, the number of registered weather-related loss events has tripled, and inflation-adjusted insurance losses from these events have increased from an annual average of around $10 billion in the 1980s to around $50 billion over the past decade," Carney told the audience at the Lloyd's of London building.
In Britain, insurers held $2.9 trillion in assets at the end of 2014, with investment goals that aim to cover risks over several decades, giving these firms a unique perspective on any global shift towards green energy investments.
“The far-sighted amongst you are anticipating broader global impacts on property, migration and political stability, as well as food and water security," Carney said. "So why isn’t more being done to address it?”
Campaigners welcomed the governor’s speech. Some hailed it as momentous and a significant milestone in climate change discussions. They now hope the Bank of England's intervention could help give investors the nudge they need to make more informed decisions.
The speech is timely, coinciding in the same week as major nations including the U.K., China and France pledged billions of dollars to help poor countries tackle climate change. The European Union has promised to cut carbon emissions by 40 percent by 2030.
Carney urged wider-reaching action.
“Once climate change becomes a defining issue for financial stability, it could already be too late,” he said.
The Bank of England governor, Mark Carney, has given a stark warning that climate change poses a huge risk to global stability. At a meeting of leading insurers at Lloyd's of London, Carney said that climate change will lead to financial crises and falling living standards unless the world’s leading countries do more to ensure that their companies come clean about their current and future carbon emissions. He pointed out the rapid increase in weather-related catastrophes, and the jump in both physical and financial costs. The governor said that proposals would probably be put to the G20 meeting in Turkey this November, urging the world’s leading developed and developing countries to bring in tougher corporate disclosure standards so that investors could better judge climate change risks.
The governor, who is chairman of the Financial Stability Board, the international body set up by the G20 in 2009 to monitor risks to the financial system, said losses would be higher than expected if recent weather events proved to be the new normal. Carney said the challenges currently posed by climate change "pale in significance compared with what might come" and that this generation had little incentive to avert future problems. He avoided saying what was causing this change, but said evidence was mounting of man's role in climate change.
Insurers are among those with the biggest interest in climate change. The syndicates operating at Lloyd's, the world's oldest insurance market, are the most exposed to disasters such as hurricanes and floods. Carney told the audience at the Lloyd's of London building, “Since the 1980s, the number of registered weather-related loss events has tripled, and inflation-adjusted insurance losses from these events have increased from an annual average of around $10bn in the 1980s to around $50bn over the past decade.”
In Britain, insurers held £1.9 trillion in assets at the end of 2014, with investment goals that aim to cover risks over several decades, giving these firms a unique perspective on any global shift towards green energy investments. The governor also said in his speech that, “The challenges currently posed by climate change pale in significance compared with what might come...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?”
Campaigners welcomed the governor’s speech. Some hailed it as momentous and a significant milestone in the climate change debate. They now hope the Bank of England's intervention could help give investors the nudge they need to make better informed decisions. The speech is timely, coinciding in the same week as major nations including the U.K., China and France pledged billions of dollars to help poor countries tackle climate change. The European Union has promised to cut carbon emissions by 40 percent by 2030. Governor Carney said, “Once climate change becomes a defining issue for financial stability, it could already be too late.”
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