Businesses must tackle climate change or 'fail to exist', Carney warns

Rodiano Bonacci
Aprile 20, 2019

Their comments accompany a new report from the Network for Greening the Financial System (NGFS), a growing worldwide group of central banks and financial regulators.

Published on Wednesday evening (17 April), the NGFS's claims that its first annual progress report will serve as a "loud wake-up call" for both financiers without strong climate frameworks and policymakers who have failed to encourage a greener finance system in their regional or national domains.

Supervisors are encouraged to set expectations for financial institutions to begin integrating and monitoring climate risks in day-to-day operations (including at the board level).

The TCFD recommendations are aimed at helping businesses and other organisations to communicate climate related risks.

The success of these recommendations relies on two important factors, which lead to two broader calls to action on disclosure and classification of climate-related financial risks.

"The financial risks we face through climate change are analytically hard, unprecedented and yet very urgent", NGFS's chairman Frank Elderson said.

"By issuing these recommendations, the NGFS members demonstrate collective leadership which will result in action to foster a greener financial system across countries and continents".

This is why world leaders signed the Paris climate agreement in 2015 and committed to reducing their respective countries' carbon emissions, the letter continues, in order to limit the global temperature rise to well below 2 degrees Celsius.

Mr Carney wrote an article for the Guardian along with his French counterpart François Villeroy de Galhau that called on financial policy makers to help tackle climate change.

"As financial policymakers and prudential supervisors we can not ignore the obvious physical risks before our eyes".

Leading central bankers have warned that climate change - combined with a poorly managed low carbon transition - has the potential to trigger a "sudden collapse in asset prices" that could devastate the financial system. We recognise that the challenges we face are unprecedented, urgent and analytically hard.

He also highlighted the work of the Extinction Rebellion group which has been causing disruption in London this week in a bid to force the government to act on climate change.

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