UK BoE Net Zero Transition Speech

On Oct. 8, UK BoE Governor spoke on helping achieve net zero.

  • Mark Carney spoke at Tokyo task force on climate-related financial disclosures (TCFD).
  • For sustainable finance, industry must transition to net zero (neutral carbon footprint).
  • He believes that those businesses that realign their business models towards net zero will be rewarded handsomely, but the businesses that fail to adapt will cease to exist.
  • The longer that meaningful adjustment is delayed, the greater the disruption will be.
  • ESG Disclosure
  • Demand for TCFD disclosures is enormous, and the supply of disclosure is responding.
  • Four fifths of top 1,100 global companies, now disclose climate-related financial risks.
  • Markets need information to assess which companies can seize the opportunities in a low carbon economy, and which are strategically resilient to the climate change risks.
  • TCFD should share best practice to increase quantity and quality of climate disclosures.
  • Private Sector Roles
  • Three quarters of banks in UK are starting to treat risks from climate change like any other financial risk, rather than simply as an issue of corporate social responsibility.
  • Private sector has made progress on reporting, risk management but more is required.
  • Companies, banks, insurers, investors must increase quantity, quality of disclosures.
  • They must also refine disclosure metrics to determine which are most decision-useful; as well as spread knowledge on how to assess strategic resilience; and also consider how to disclose the extent to which portfolios are ready for the transition to net zero.
  • What Can TCFD Do
  • TCFD must work to increase quantity, quality of disclosures, by sharing best practice.
  • Their disclosure recommendations should be refined to those most decision-useful.
  • Develop practice, spreading knowledge on how to measure, use resilience information.
  • Consider how asset owners could disclose how portfolios are positioned for transition.

Regulators UK BoE; UK PRA
Entity Types Auditor; Bank; BS; CRA; Ins; Inv Co; Pension
Reference SP, 10/8/2019; ESG
Functions Accounting; Financial; Operations; Risk; Treasury
Countries United Kingdom
Products Banking; Commodities; Corporate; Fund Mgt; Insurance; Pensions
Regions EMEA
Rule Type Guidance
Rule Date 10/8/2019
Effective Date 10/8/2019
Rule Id 66033
Linked to N/A
Reg. Last Update 10/8/2019
Report Section UK

Last substantive update on 10/09/2019