Everyone is worried about the impact from climate change. Larry Elliott writes in The Guardian about a newly announced task force that will help the financial markets understand mounting climate-change risks.
Michael Bloomberg to head global taskforce on climate change
Michael Bloomberg, the former New York City mayor, is to head a new global taskforce aimed at highlighting the financial exposure of companies to the risk of climate change.
Investors, insurers, banks and consumers will be provided with more information under plans for a voluntary industry-led code announced by the Financial Stability Board (FSB), the G20 body that monitors and makes recommendations about the financial system, at the COP21 Paris climate change conference on Friday.
Announcing the decision, Mark Carney, governor of the Bank of England and FSB chair, said the industry-led body would help the financial markets understand mounting climate-change risks.
Carney warns of risks from climate change ‘tragedy of the horizon’
Carney, who proposed the creation of the climate change taskforce in a speech to the Lloyd’s insurance market in September, added: “Access to high-quality financial information will allow market participants and policymakers to understand and better manage those risks, which are likely to grow with time.”
Carney said that Bloomberg, the UN special envoy for cities and climate change, had “an unparalleled track record of execution in a broad range of fields and his lifelong commitment to open and transparent financial markets make him the ideal leader for the taskforce”.
Bloomberg, the billionaire founder of the eponymous financial news and data company, said: “It’s critical that industries and investors understand the risks posed by climate change, but currently there is too little transparency about those risks.
“While the business and finance communities are already playing a leading role on climate change, through investments in technological innovation and clean energy, this taskforce will accelerate that activity by increasing transparency. And in doing so, it will help make markets more efficient, and economies more stable and resilient.”
The FSB said the taskforce would complete its work within a year and would deliver specific recommendations for voluntary disclosure principles. As part of its work the taskforce will conduct public outreach.
Chris Cheetham, global chief investment officer at HSBC global asset management, said: “The establishment of this taskforce is an important step towards creating the transparency and consistent standards needed for investors and pension funds to understand the risks and opportunities within their portfolios as we transition to a low carbon economy.”
Stephanie Pfeifer, chief executive of IIGCC, a European network of Institutional Investors with €13tn (£8.61tn) in assets, said: “Access to high-quality information can only help accelerate the reallocation of capital by investors in ways that will accelerate the low carbon transition. More consistent and reliable carbon disclosure will make it easier for investors to evaluate climate risk in their portfolios and understand where the opportunities in clean energy and other essential low carbon technology lie.”
In April 2015, G20 finance ministers and central bank governors asked the FSB “to convene public- and private- sector participants to review how the financial sector can take account of climate-related issues”. The idea was pursued by Carney in his Lloyds speech.
The Bank of England governor said in September that it was important to take action because “once climate change becomes a defining issue for financial stability, it may already be too late”.
He added: “Companies would disclose not only what they are emitting today, but how they plan their transition to the net-zero world of the future. The G20 – whose member states account for around 85% of global emissions has a unique ability to make this possible.”
Simon Howard, chief executive of the UK sustainable and investment finance association said better disclosure would help investors prepare for the challenges ahead and play a part in identifying profitable mitigation opportunities.