Mark Carney Under Attack From Investors

  • Date: 05/10/15
  • Madison Marriage and Richard Stovin-Bradford, Financial Times

Mark Carney’s warning that investors face “potentially huge” losses from their “stranded” coal, oil and gas assets has riled many in the investment community who believe the Bank of England governor has spoken out of turn.

 

Mystic Mark Carney, the Bank of England’s new seer

The former Goldman Sachs banker’s speech to insurers in London last week has made him the most prominent financial policymaker to endorse the contentious idea that fossil fuel assets could be stranded as governments try to curb global warming. 

“The exposure of UK investors to these shifts is potentially huge. Once climate change becomes a defining issue for financial stability, it may already be too late,” Mr Carney said. 

Although the governor did not suggest the BoE would attempt to enforce stricter climate-risk regulations for financial institutions, many senior investors have criticised his comments as going beyond his scope. 

An asset management executive at a large Dutch fund house, who requested anonymity, said: “It is pretty weird that a central banker is taking this position. [He should] stick to his [neck] of the woods. 

“Whether he is right or wrong is a debate that has been going on for a couple of decades. What are his new insights on this matter to start rocking the boat like this? And what are his solutions?” 

The chief investment officer of a large UK pension fund, who requested anonymity, agreed: “Mr Carney should stick to his mandate. Carbon policy is a matter for politics and government legislation, not the Bank of England.” 

A spokesperson for the BoE said: “The suggestion that the governor’s speech was somehow outside the bank’s and [Financial Stability Board’s] remit is nonsense. The speech focused on financial stability risks and that is a major part of the bank’s remit. 

“The governor made clear that we are not scientists or climate experts and simply referred to external evidence on this matter while also calling for greater transparency so investors can make up their own minds.”

Other investors also expressed scepticism about the stranded-assets theory, as well as the extent and the immediacy of the risks underlined by Mr Carney.

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