Mark Carney, the Bank of England governor, has issue a strong warning that climate change could lead to financial crises and falling living standards. This was in a speech to Lloyd's of London warning insurers that they are heavily exposed to climate change effects. Carney terms it "the tragedy of the horizon" suggesting that for monetary policy that horizon is only two or three years out, and even for financial stability it is perhaps just a decade or so. In other words, by the time climate change becomes a defining issue for financial stability it may already be too late.
In order that exposure to climate change threats be more clearly defined Carney advocates the development of consistent, comparable, reliable and clear disclosure around the carbon intensity of different assets. It is good to see such warnings coming from so eminent a source but will it have the required effect? Owners of carbon intensive assets have hardly embraced the climate change story so far - I have my doubts that this intervention will change that situation.
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