Lord Stern delivers stark warning to Mark Carney’s climate task force
A leading economist said oil, gas and coal firms risk financial ruin if they ignore global climate agreements, in a stark warning to the task force set up by Bank of England governor Mark Carney.
Lord Nicholas Stern, who is renowned for his work on climate change, warned: "Business models reliant on the assumption that governments were not serious in Paris are looking increasingly vulnerable."
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"Actual or expected changes in policy, technology, and physical risks as well as the threat of litigation could prompt a rapid reassessment of the value of a large range of assets as changing costs and opportunities become apparent."
Carney created the body to encourage businesses to make voluntary disclosures to help investors compare the risks that they face from climate change, in the run-up to the Paris climate agreement which 195 countries adopted.
It's thought that the agreement will reduce future demand for fossil fuels, which could wreck the finances of affected firms. Nevertheless, many of them expect fossil fuel demand to increase over at least the next 20 years.
The submission also warned of an "alarming" gap between what the international community signed up to at Paris and what fossil fuel firms expect. It was co-authored Dimitri Zenghelis, co-head of policy at the Grantham Research Institute on Climate Change at the London School of Economics.
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"If an oil company does not believe global policy makers will adopt the measures necessary to attain the decarbonisation outlined in the Paris Agreement, then they need to be explicit about this."
"From an investor point of view, it is one thing for a business to assume that governments were not serious in Paris, but it is quite another to pin their entire strategy on this being so."