Bank of England governor’s climate change warning puts the focus on the bottom line
No doubt Bank of England governor Mark Carney has personal views on whether or not climate change is a danger to his children’s future. Most thoughtful people do.
But when the former Bank of Canada governor spoke to a high-powered audience of insurance executives this week, unlike environmentalists such as Leonardo DiCaprio, he didn’t emphasize their moral obligation to future generations. Perhaps after the VW scandal, he realized there was a more direct way to a businessperson’s heart.
He appealed to their bottom line.
“Changes in policy, technology and physical risks could prompt a reassessment of the value of a large range of assets as costs and opportunities become apparent,” he told the group.
“Longer-term risks could have severe impacts on you and your policyholders.”
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When New Democratic Party candidate Linda McQuaig raised some of the same issues in the current federal election campaign, saying part of Canada’s fossil fuel resources might have to be left in the ground, it played as a left-right issue.
Dwayne Roy checks an active well site near Lloydminster, Sask., this summer. Bank of England governor Mark Carney says investors must realize oil may have to be left in the ground. (Reuters)
“For the hundreds of thousands of people whose jobs are dependent on Canada’s energy sector, listen to what you just heard,” responded Conservative candidate Michelle Rempel.
Profit and loss, not left and right
But for Carney’s audience at a Lloyd’s of London black tie dinner, the issue is not a matter of left or right politics, but a matter of profit and loss.
Insurance companies often pay the bills when storms and flooding do their damage. Climate change is likely to make those insurable crises worse.
But perhaps more important, against those potential losses, insurance companies hold trillions of dollars in assets invested in all kinds of stocks and bonds. And Carney said those assets were threatened.
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