“Enable, Empower, Ensure: A new finance for the new Economy”

Mark Carney, Governor of the Bank of England, made a speech yesterday evening at Mansion House in London detailing how the Bank of England will support the transition to a climate neutral economy with a climate stress test of the UK financial system. The Bank also expects all listed companies and large asset owners to use these by 2022.

Mr Carney devoted an entire section of his speech to ensure that the UK is ready with finance to enable the smooth transition to a carbon-neutral economy, stating that the City has been leading the way but that we must go much, much further.

He announced the new stress test:

“Today the Bank is going much further. The Financial Policy Committee and the Prudential Regulation Committee are announcing that they will stress test the UK financial system for resilience against different climate pathways. The design of this stress test will start in the autumn, and the tests will be completed in 2021. The stress test will reveal the UK financial system’s ability to withstand the financial risks from climate change that arise from the increased frequency of weather events and from the transition to a carbon-neutral emission economy. The test will motivate firms to address data gaps and to develop cutting-edge risk management consistent”

In his speech he states “with this new supervisory approach, the Bank will help ensure that the financial system is resilient to the risks and can take full advantage of the enormous opportunities in a carbon-neutral economy. The path to a carbon-neutral economy will affect every institution in this country—very much including the Bank of England. We need to do more than just cutting out cups and bringing up bees. We must lead by example.”

Elmhurst Energy’s Technical and Operations Director Stuart Fairlie commented: “We very much welcome Mark Carneys words as the ability for the economy to be ready for the carbon neutral future is essential. The Bank of England’s influence on ensuring that we are ready as a nation is vital; the more businesses and organisations that understand the opportunities this provides, the better for all of us. Taking Mr Carney’s conclusion, finance in itself is not a means to an end, it provides the solutions to households, innovators and entrepreneurs to achieve their goals. The goals of a sustainable future for all, seems to be mainstream, long may this continue.”

You can read the full speech here

Article Published: 21st June 2019

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