Bank of England governor, Mark Carney, has written to the Environmental Audit Committee at Parliament regarding unburnable carbon, or fossil fuel assets which will need to remain unexploited if climate change is to be kept to the internationally agreed 2°C level of global warming.
The Bank of England’s financial policy committee will investigate the potential risks that fossil fuel assets pose to financial stability. According to climate campaign group Carbon Tracker, it is the first major acknowledgement from a financial regulator that much of the world’s listed coal, gas and oil reserves could become stranded assets. Carbon Tracker founder and executive director, Mark Campanale, said: “Poor disclosure practices from fossil fuel companies could be masking financial risks of fossil fuel assets. This is in part due to inadequate signalling from capital market regulators that these issues are important, or indeed material, and are required by investors to effectively manage their exposure to this risk. Now is the time for guidance and direction to assist companies in preparing new risk disclosures that are fit for this purpose.”
Carbon Tracker said that the Bank of England’s enquiry should not remain an isolated case, but other international financial regulators, particularly from global financial and fossil fuel centres such as US, Canada, EU and China, should conduct similar enquiries into the risks associated with unburnable carbon and stranded assets.