September 23, 2019 / 5:51 PM / 2 months ago

BOE's Carney urges financial sector to transform management of climate risk

FILE PHOTO: Mark Carney, Governor of the Bank of England (BOE) speaks at the Council on Foreign Relations in New York, U.S., September 10, 2019. REUTERS/Mike Segar

UNITED NATIONS (Reuters) - Bank of England Governor Mark Carney said on Monday that the financial sector must transform its management of climate risk, warning that global warming would prompt reassessments of the value of every single financial asset.

“Climate disclosure must become comprehensive, climate risk management must be transformed, and sustainable investing must go mainstream,” Carney told a United Nations climate summit.

Carney has been a leading voice among regulators in warning of the risks climate change poses to the stability of the global financial system. He has led various international initiatives to improve supervision and disclosure.

As climate impacts - from wildfires to sea-level rise and hurricanes - intensify, investors are increasingly concerned over the risks that extreme weather could pose to assets and companies in their portfolios.

The valuations of fossil fuel companies could also be at risk if governments act to spur stronger action to curb greenhouse gas emissions and accelerate the adoption of renewable energy, analysts say.

Carney said that mandatory disclosures of climate risk would be essential in supporting efforts to transition economies to net-zero carbon emissions by 2050 in line with the 2015 Paris Agreement to limit the rise in average global temperatures.

“The world won’t get to net zero if the financial sector doesn’t know how companies are responding,” Carney said. “To watch, you need to be able to see.”

Reporting by Matthew Green; editing by Grant McCool and Jonathan Oatis

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