The governor of the Bank of England has warned companies and industries that are not moving towards zero-carbon emissions will be punished by investors and go bankrupt.
Mark Carney also told the Guardian newspaper it was possible that the global transition needed to tackle the climate crisis could result in an abrupt financial collapse.
He said the longer action to reverse emissions was delayed, the more the risk of collapse would grow.
Mr Carney has led efforts to address the dangers global heating poses to the financial sector, from increasing extreme weather disasters to a potential fall in asset values such as fossil fuel company valuations as government regulations bite.
It was revealed last week that just 20 fossil fuel companies have produced coal, oil and gas linked to more than a third of all emissions in the modern era.
The Guardian reports the Bank of England has said up to US$20 trillion of assets could be wiped out if the climate emergency is not addressed effectively.
Mr Carney also said great fortunes could be made by those working to end greenhouse gas emissions with a big potential upside for the United Kingdom economy in particular.
In an interview with the Guardian, Mr Carney said disclosure by companies of the risks posed by climate change to their business was key to a smooth transition to a zero-carbon world as it enabled investors to back winners.
“There will be industries, sectors and firms that do very well during this process because they will be part of the solution,” he said.
“But there will also be ones that lag behind and they will be punished.”
Mr Carney said in July: “Companies that don’t adapt will go bankrupt without question.”
United States coal companies had already lost 90 per cent of their value, he noted, but banks were also at risk.
“Just like in any other major structural change, those banks overexposed to the sunset sectors will suffer accordingly,” he told the Guardian.
The central bank governor said transition to net zero carbon emissions would change the value of every asset, raising the risk of shocks to the financial system.
“Some assets will go up, many will go down.
“The question is whether the transition is smooth or is it something that is delayed and then happens very abruptly. That is an open question,” he said.
“The longer the adjustment is delayed in the real economy, the greater the risk that there is a sharp adjustment.”
In April, Mr Carney said: “The stakes are undoubtedly high, but the commitment of all actors in the financial system to act will help avoid a climate-driven ‘Minsky moment’, the term we use to refer to a sudden collapse in asset prices.”
Far from damaging the global economy, climate action bolsters economic growth, according to Mr Carney.
“There is a need for action to achieve net zero emissions, but actually it comes at a time when there is a need for a big increase in investment globally to accelerate the pace of global growth, to help get global interest rates up, to get us out of this low-growth, low-interest-rate trap we are in.”
Failing to act would have severe consequences, he said.
“I don’t normally quote bankers, but James Gorman, who is the CEO of Morgan Stanley, said the other day: ‘If we don’t have a planet, we’re not going to have a very good financial system.’ Ultimately, that is true.”
The UK remained a climate leader, Mr Carney said, and could benefit from action as a climate-smart financial centre and zero-carbon industrial force.
Last week, Mr Carney told big corporations they had two years to agree rules for reporting climate risks before global regulators devised their own and made them compulsory.
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