Markets are flying blind on climate change

Markets are flying blind on climate change

David G. Victor, Sadie Frank, Eric Gesick and Parker Bolstad – Brookings

As wildfires scorch the west, and multiple hurricanes threaten the Atlantic coasts, it is clear that even amidst a global pandemic the problem of climate change requires attention. One barrier to action has been the inability to get the financial markets fully engaged. They move trillions of dollars, and if moved in the right ways they could be a powerful force for good.

In 2015, Mark Carney, then head of England’s central bank, rattled those markets (and the op-ed pages even more) by warning that global equities markets were poised for a major shock when governments started to regulate emissions of gases that contributed to global warming. The valuation of oil and gas companies, like many others, would be shattered as governments forced a transition away from big polluting activities, he warned. This “transition risk,” as it is known, wouldn’t just cause financial instability, but those impacts might also reverberate through the real economy.

This article considers the hypothesis that the physical risks of climate change are the real worry for financial instability. Click the link below for the full article.

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