Mark Carney: A New Horizon

Speech by Mr Mark Carney, Governor of the Bank of England, at the European Commission Conference "A global approach to sustainable finance", Brussels, 21 March 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

A New Horizon?

A few years ago, I spoke of the Tragedy of the Horizon - how the catastrophic impacts of climate change will be felt beyond the traditional horizons of most banks, investors and financial policymakers, imposing costs on future generations that the current one has no direct incentives to fix.1 Once climate change becomes a clear and present danger to financial stability it could already be too late to stabilise the atmosphere at two degrees.

The paradox is that risks will ultimately be minimised if the transition to a low-carbon economy begins early and follows a predictable path. But for markets to anticipate and smooth the transition to a 2-degree world, they need the right information, proper risk management, and coherent, credible public policy frameworks.

Today, catalysed by the COP21 Paris Agreement, and national policies such as the UK Government's Clean Growth Strategy, some of these elements are coming into place, creating a potential path to break the Tragedy of the Horizon. But the task is large, the window of opportunity is short, and the stakes are existential.