Mark Carney the governor of the Bank of England (BOE) has warned that if companies fail to prepare for climate change then they “will go bankrupt without question.”
The government has asked the central bank to “stress test” the economy to prepare for climate change.
Carney told Channel 4 News, “The government have said to us one of your responsibilities when you look at the stability of the financial system is to look at the risk from climate change.
“Because of the climate change risk, because of the speed of adjustment, we are going to stress test the UK financial system to see how ready it is for climate change.”
Carney said the BOE’s “job is to make sure the financial system can be there and provide the funds for whatever path the country chooses to take”.
He added, “The country is moving to net zero carbon by 2050.
“That is a legislative objective and that is going to require some pretty major changes to how the economy functions.
“So, if you are in finance, a bank, an insurance company or an asset manager, you need to think about investments, who you have lent to, and how those could be affected as we travel along that path.
“There are many different paths that the economy could take. Is your strategy resilient? Is it ready for different types of approaches to address the climate question?”
Carney said that capitalism is “part of the solution” in combating climate change and the financial industry can provide “leadership for reasons of profit for reasons of good.”
The governor added, “Companies that don’t adapt, including companies in the financial system, will go bankrupt without question.
“Any major structural change, there are companies that are not ready, that move too slowly, that cannot adapt, and that will happen.
“But also, and you’ve used the term capitalists here, there will be great fortunes made along this path aligned with what society wants.
“Provided that the climate policies are put in place, not by us but by others, we will have the financial system ready to amplify the effectiveness of those policies and move the country forward.
“Lastly, and I think this is undersold here, the UK is at the forefront and the UK, by demonstrating it can make these adjustments, will encourage others to come along with them.”