"I do think the industry is leading and I think the public will soon jump a bit ahead of us as well."
Speaking at PIMFA’s inaugural Virtual Fest yesterday, the former Bank of England Governor said professionals in the financial services sector had started to see climate change and the approach of corporates to achieving the government’s target of net zero carbon emission as “a new vector of value”.
“Corporates and the financial sector have jumped ahead of government,” he said. “Companies that have a strategy will be rewarded. This is not a passive investment strategy, you need the information but you also need the judgements around it. So yes I do think the industry is leading and I think the public will soon jump a bit ahead of us as well.”
Outlining the scale of the challenge facing world leaders in reducing carbon emissions Mr Carney said the recent Covid-19 crisis has seen a 6% fall in the level of global carbon emissions. But he added: “We would need to see that globally compound in order to achieve net zero emissions by 2050. So the scale of the challenge is quite significant. This is a whole economy adjustment, this isn’t just about niche products or renewable solutions or xing out some dark brown industries or fossil fuels.”
But there had already been progress, he added. There had already been a couple of reporting cycles under the parameters outlined by the Task Force on Climate-related Financial Disclosure and the terms of those disclosures were already being refined so that it was as consistent as possible for the end user. The next step would be for such disclosures to become mandatory. What was encouraging was that the demand for this type of disclosure was very high, he said.
Carney said he expected to see more “disclosure of transition plans by companies” in the next year and “what will be reflected in investment portfolios will be which companies have a transition plan for net zero carbon emissions”.
Liz Field, chief executive of PIMFA, commented: “We are very grateful to Mark Carney for his time and insights. How the economy evolves, in the years to come to meet the twin challenges posed by the immediate pressure of the Covid-19 outbreak and the need to meet our climate goals is likely to have profound and long-term implications for future generations.
"Transitioning to a whole economy approach to achieving net zero carbon emissions will require policymakers and industry to work together. But it is clear there is a desire to meet the climate change targets and that there is demand for a greener economy. Wealth managers and financial advisers will play an important role in helping investors to support those companies offering solutions to the climate crisis.”
