Wednesday - September 22, 2021 | News & Views | 3 min read
It is the last day of the year, of a decade, and soon to be the day a remarkable leader steps down as the Governor of a very influential and powerful organization – The Bank of England.
I have had the pleasure of meeting Mark Carney a few times when he was speaking at The Prince’s Accounting for Sustainability Project (A4S) Summits*.
The first time we met was in 2016, not long before he gave one of his famous speeches and authored an article for WEF on Keeping the patient alive: Monetary policy in a time of great disruption, an article still worth reading as it addresses many of the issues that we continue to discuss today: inequality, responsibility of corporations – including responsible tax management – and the increased anxiety about the future.
However, it is another speech that he will receive the award for, a speech he gave as Governor of the Bank of England and Chairman of the Financial Stability Board at a Dinner at the insurance giant Lloyds on September 29, 2015: his speech Breaking the Tragedy of the Horizon – climate change and financial stability.
The conclusion of that speech reads like this:
“Our societies face a series of profound environmental and social challenges.
The combination of the weight of scientific evidence and the dynamics of the financial system suggest that, in the fullness of time, climate change will threaten financial resilience and longer-term prosperity.
While there is still time to act, the window of opportunity is finite and shrinking.
Others will need to learn from Lloyd’s example in combining data, technology and expert judgment to measure and manage risks.
The December meetings in Paris will work towards plans to curb carbon emissions and encourage the funding of new technologies.
We will need the market to work alongside in order to maximize their impact.
With better information as a foundation, we can build a virtuous circle of better understanding of tomorrow’s risks, better pricing for investors, better decisions by policymakers, and a smoother transition to a lower-carbon economy.
By managing what gets measured, we can break the Tragedy of the Horizon.”
This was much more than a speech. Since the speech, Mark Carney has been working on Breaking the Tragedy of the Horizon. On December 4, 2015, the Taskforce on Climate-Related Financial Disclosure (TCFD) was launched. Mark Carney is vocal – very vocal – on the consequences we all – including companies – will face by continuing ‘business as usual.’ Latest was a BBC interview yesterday, December 30, 2019, where he said “The world will face irreversible heating unless firms shift their priorities soon,” and challenged with “A question for every company, every financial institution, every asset manager, pension fund or insurer: what’s your plan?”
Mark Carney called Climate Change a “tragedy of the horizon” because the decision-making time horizon of investment managers is between two and ten years. “In those horizons, there will be more extreme weather events, but by the time that the extreme events become so prevalent and so obvious it’s too late to do anything about it,” he said.
He told those questioning the consensus on climate change: “We can’t afford on this one to have selective information, spin, misdirection… It needs to be absolutely clear because we are all in on it.”
For 2020, I hope that we all will put a plan together and stick to it – a plan that can keep us on 1.5-degree warming – A plan that can ensure that those who have saved for their retirement will both have the money, the health, and the beauty of nature to enjoy, and that their children and grandchildren will have the same opportunity.
Thank you, Mark, for your leadership and your plan! – I know that you will continue your work as the United Nations special envoy for climate action and finance.
The Sustainability Leadership Award for a decade goes to Mark Carney, Governor of the Bank of England!
Happy New Year!
*A4S was established by HRH The Prince of Wales in 2004 with an aim to make sustainable decision-making business as usual. I’m proud to be serving at the Expert Panel.