Bank of England governor Mark Carney has warned investors they could face “huge” financial losses due to climate change.
Speaking at a gathering of insurers at Lloyd’s of London last night, Carney said the challenges posed by the weather-related catastrophes “pale in significance compared with what might come”, the BBC reports.
He said insurers are the most exposed to disasters such as hurricanes and floods.
Carney noted the 19 per cent of FTSE 100 companies that are in natural resource and extraction sectors as well as the 11 per cent covering power utilities, chemicals, construction and industrial goods sectors account for around one third of equity and fixed income assets.
He added: “On the other hand, financing the decarbonisation of our economy is a major opportunity for insurers as long-term investors. It implies a sweeping reallocation of resources and a technological revolution, with investment in long-term infrastructure assets at roughly quadruple the present rate.
”For this to happen, ’green’ finance cannot conceivably remain a niche interest over the medium term.”
Carney also warned assets of fossil fuel companies could be left “stranded” as climate change could make reserves of oil, coal and gas “literally unburnable”, the FT also reports.
Carney said: “The far-sighted amongst you are anticipating broader global impacts on property, migration and political stability, as well as food and water security.
“In other words, once climate change becomes a defining issue for financial stability, it may already be too late.”