Carney warns firms’ assets could become worthless if climate crisis not realised

Bank of England financial stability report
Bank of England financial stability report

The outgoing governor of the Bank of England has warned firms that their assets could become "worthless" if they do not wake up to the climate crisis.

Mark Carney, who will step down from the post in March, said the financial sector was starting to curb investment in fossil fuels, but that it is "not moving fast enough".

He made the comments in an interview with BBC Radio 4's Today programme – guest edited by environmental campaigner Greta Thunberg – which will be broadcast on Monday.

Mr Carney said companies "have to make the judgment and justify to the people whose money it ultimately is" in relation to divestment.

Pressed on whether pension funds should divest from fossil fuels even if the returns are 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."

And he warned: "If we were to burn all those oil and gases there's no way we would meet carbon budgets.

"Up to 80% of coal assets will be stranded, (and) up to half of developed oil reserves."

Mr Carney added: "A question for every company, every financial institution, every asset manager, pension fund or insurer: What's your plan?"

He 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," Mr Carney said.

He also urged climate change sceptics to drop their challenges to the issue, saying: "We can't afford on this one to have selective information, spin, misdirection... it needs to be absolutely clear because we are all in on it."