Anita Hawser
October 1, 2025
On September 29 2015, then Bank of England governor Mark Carney framed climate change for the first time as an existential threat to the financial system.
In his “Breaking the tragedy of the horizon” speech delivered to insurers at Lloyd’s of London, he warned of climate change’s catastrophic impacts, which could transmit risks to financial stability in three ways — physical risks from weather-related events, liability risks, and transition risks from the shift to a low-carbon economy.
Given the time horizon for monetary policy only extends out two to three years, by the time climate change becomes a defining issue for financial stability, it may already be “too late”, Carney, who is now prime minister of Canada, warned in his speech.
Ten years on, as experts reflect on the impact his speech had, and what’s changed since, some say his stark warning “woke up” financial institutions to the risks of climate change and fired the “starting gun” in helping central banks and financial supervisors better understand the associated financial risks.
However, financial risks linked to climate change are accelerating, they add, and could go unaddressed due to greater geopolitical fragmentation and the scaling back of climate ambitions. Some fear he may have forgotten his own words as climate risks “pile up” in Canada.
“Climate risks are now more elevated because the [low-carbon] transition is late and financing is insufficient,” said Pierre Monnin, a senior fellow at international sustainability think-tank the Council on Economic Policies. Monnin was speaking at a panel discussion on Monday to mark the 10th anniversary of Carney’s 2015 speech.
Fellow panellist, David Carlin, former head of risk at the UN Environment Programme’s Finance Initiative, warned that the US’s retreat from its climate commitments had compounded climate risks to the financial system.
“Will the world decarbonise without America? Yes. Will the US be the amplifier of future financial risks? That is a real concern,” he said, adding that the financial sector is where the US retains outsize influence as assets are higher in value. While physical climate risks — hurricanes, wildfires and flooding — are happening everywhere, Carlin said what we are seeing in the US and other jurisdictions are amplifying climate transition risks.
In a statement addressed to central banks and prudential supervisors, issued on the 10th anniversary of Carney’s speech, more than 50 organisations, including the Rainforest Action Network, Sierra Club, Friends of the Earth, and the Union of Concerned Scientists, called for further reforms of the financial system to prevent it from “deepening” the climate crisis.
They propose regulatory measures — including capital buffers for loans and investments in higher-carbon-emitting sectors and mandatory Paris-aligned climate transition plans — saying that the costs of inaction are mounting.
“Climate-related losses are growing rapidly, and with them, existential economic system risk,” the groups warned, pointing to data from the International Chamber of Commerce, which estimates that extreme weather events have cost the global economy more than $2tn in the past decade.
Despite fossil fuel financing by the world’s largest banks falling by more than 23 per cent from 2021 to 2023, the group claims progress has stalled, with financing mostly directed at expansion rebounding last year to reach almost $869bn.
‘Sketchy’ implementation
“A scenario of no transition, business as usual is the worst scenario for financial stability,” said Monnin. “Financial supervisors have an interest in seeing the transition happen if they want to fulfil their mandate of financial stability.”
Since Carney delivered his speech to insurers in 2015, climate risk reporting and disclosures have become mandatory in many jurisdictions. However, Thom Wetzer, a founding director of Oxford university’s sustainable law programme, said there are “clear gaps” with Scope 3 emissions — indirect emissions that occur in an organisation’s upstream and downstream activities — not being widely disclosed.
There is also “sketchy implementation” of transition plans charting how companies will become lower-carbon businesses.
“Climate risk disclosure alone is not sufficient to shift finance and the economy,” said Wetzer, pointing to deep and growing uncertainty around how policymakers will respond.
“Pre-2024 we were moving in a more harmonised direction; now we are seeing global fragmentation,” he said.
In January, the New York Federal Reserve announced that it had withdrawn from the Network of Central Banks and Supervisors for Greening the Financial System, which was set up two years after Carney delivered his speech to help regulators better understand the risks of climate change. Global consensus on financial regulations such as the Basel accord has also splintered.
Carney, too, has moved since making his speech. The former UN Special Envoy on Climate is more consumed these days with running his native
Canada, and battling its closest neighbour the US on trade tariffs.
“As prime minister of Canada, Mark Carney has a rapidly closing window to demonstrate that he hasn’t forgotten his own words,” Adam Scott, executive director of Shift: Action for Pension Wealth & Planet Health, said in a statement.
“He must take urgent action to regulate [Canada’s] financial sector to align with climate stability, before it’s too late.”
www.thebanker.com
October 1, 2025
On September 29 2015, then Bank of England governor Mark Carney framed climate change for the first time as an existential threat to the financial system.
In his “Breaking the tragedy of the horizon” speech delivered to insurers at Lloyd’s of London, he warned of climate change’s catastrophic impacts, which could transmit risks to financial stability in three ways — physical risks from weather-related events, liability risks, and transition risks from the shift to a low-carbon economy.
Given the time horizon for monetary policy only extends out two to three years, by the time climate change becomes a defining issue for financial stability, it may already be “too late”, Carney, who is now prime minister of Canada, warned in his speech.
Ten years on, as experts reflect on the impact his speech had, and what’s changed since, some say his stark warning “woke up” financial institutions to the risks of climate change and fired the “starting gun” in helping central banks and financial supervisors better understand the associated financial risks.
However, financial risks linked to climate change are accelerating, they add, and could go unaddressed due to greater geopolitical fragmentation and the scaling back of climate ambitions. Some fear he may have forgotten his own words as climate risks “pile up” in Canada.
“Climate risks are now more elevated because the [low-carbon] transition is late and financing is insufficient,” said Pierre Monnin, a senior fellow at international sustainability think-tank the Council on Economic Policies. Monnin was speaking at a panel discussion on Monday to mark the 10th anniversary of Carney’s 2015 speech.
Fellow panellist, David Carlin, former head of risk at the UN Environment Programme’s Finance Initiative, warned that the US’s retreat from its climate commitments had compounded climate risks to the financial system.
“Will the world decarbonise without America? Yes. Will the US be the amplifier of future financial risks? That is a real concern,” he said, adding that the financial sector is where the US retains outsize influence as assets are higher in value. While physical climate risks — hurricanes, wildfires and flooding — are happening everywhere, Carlin said what we are seeing in the US and other jurisdictions are amplifying climate transition risks.
In a statement addressed to central banks and prudential supervisors, issued on the 10th anniversary of Carney’s speech, more than 50 organisations, including the Rainforest Action Network, Sierra Club, Friends of the Earth, and the Union of Concerned Scientists, called for further reforms of the financial system to prevent it from “deepening” the climate crisis.
They propose regulatory measures — including capital buffers for loans and investments in higher-carbon-emitting sectors and mandatory Paris-aligned climate transition plans — saying that the costs of inaction are mounting.
“Climate-related losses are growing rapidly, and with them, existential economic system risk,” the groups warned, pointing to data from the International Chamber of Commerce, which estimates that extreme weather events have cost the global economy more than $2tn in the past decade.
Despite fossil fuel financing by the world’s largest banks falling by more than 23 per cent from 2021 to 2023, the group claims progress has stalled, with financing mostly directed at expansion rebounding last year to reach almost $869bn.
‘Sketchy’ implementation
“A scenario of no transition, business as usual is the worst scenario for financial stability,” said Monnin. “Financial supervisors have an interest in seeing the transition happen if they want to fulfil their mandate of financial stability.”
Since Carney delivered his speech to insurers in 2015, climate risk reporting and disclosures have become mandatory in many jurisdictions. However, Thom Wetzer, a founding director of Oxford university’s sustainable law programme, said there are “clear gaps” with Scope 3 emissions — indirect emissions that occur in an organisation’s upstream and downstream activities — not being widely disclosed.
There is also “sketchy implementation” of transition plans charting how companies will become lower-carbon businesses.
“Climate risk disclosure alone is not sufficient to shift finance and the economy,” said Wetzer, pointing to deep and growing uncertainty around how policymakers will respond.
“Pre-2024 we were moving in a more harmonised direction; now we are seeing global fragmentation,” he said.
In January, the New York Federal Reserve announced that it had withdrawn from the Network of Central Banks and Supervisors for Greening the Financial System, which was set up two years after Carney delivered his speech to help regulators better understand the risks of climate change. Global consensus on financial regulations such as the Basel accord has also splintered.
Carney, too, has moved since making his speech. The former UN Special Envoy on Climate is more consumed these days with running his native
Canada, and battling its closest neighbour the US on trade tariffs.
“As prime minister of Canada, Mark Carney has a rapidly closing window to demonstrate that he hasn’t forgotten his own words,” Adam Scott, executive director of Shift: Action for Pension Wealth & Planet Health, said in a statement.
“He must take urgent action to regulate [Canada’s] financial sector to align with climate stability, before it’s too late.”
Ten years on: has Mark Carney forgotten his own words on climate change?
The former BoE governor’s 2015 speech ‘woke up’ finance to climate risks, but now progress has stalled
www.thebanker.com
