Bank of England’s Carney: Business must come clean quickly on climate

Mark Carney, Governor of the Bank of England, believes that major companies need to p
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Updated 15 February 2020

Bank of England’s Carney: Business must come clean quickly on climate

LONDON: Bank of England Governor Mark Carney called on the world’s businesses to publish strategies for cutting carbon emissions and adopting cleaner power sources by November, when world leaders meet in Scotland for UN-led climate talks.

“It’s not just green assets and divestment campaigns or certain things are so brown or black. Every company ultimately has to have a plan for a transition and what the opportunities are and where the risks are,” Carney said.

“For Glasgow that must be well on the path. That that is the norm. That the question doesn’t even have to be asked because companies are answering that question as part of their strategy.

“And the answer is, it’s the transition, stupid,” he said, referencing a phrase coined by former US President Bill Clinton’s election strategist in reference to the US economy.

Carney was speaking to Reuters a month before he leaves his nearly seven-year posting at the helm of the UK’s central bank to take a new role as the UN envoy for climate.

The Canadian banker, who disarmed the British insurance industry in 2015 when, in a speech called “Tragedy of the Horizon,” he warned of their exposure to climate-related events, has been one of the most vocal public figures to push for better supervision and disclosure of climate risk.

The Task Force on Climate-related Financial Disclosures (TCFD), which he launched in 2015, has become a global standard that more than 1,000 companies, financial firms, governments and other organizations have adhered to.

But it remains voluntary, and it can be hard to compare and verify the claims of disclosures.

Hammering out a common set of global reference points on climate-related disclosures is seen by many as a crucial step to helping investors allocate capital more effectively.

Money would flow to those companies managing the risks — and therefore likely to perform better in the transition to a low-carbon economy — and away from those in danger of being impacted more severely.

Carney said November’s COP26 climate talks would also be a good deadline for regulators to map out how to make the TCFD framework compulsory.

“One of the things we will look at ahead at for the COP26 is ‘should we have pathways to make the TCFD mandatory?’ Not overnight, but through listing requirements or securities regulation disclosure standards,” he said.

Such an effort needs to be global, Carney added, encompassing regions laying out their own plans for cutting emissions. The EU recently announced a 1 trillion euro ($1.08 trillion) effort become carbon neutral by 2050, a strategy that includes introducing a new climate law by next month.

“It would be productive if other jurisdictions that potentially will have mandatory disclosure standards ... used more conventional routes than legislation, such as securities regulations or listing standards. Let’s have that conversation,” Carney said.

Carney could play an outsized role at November’s summit, especially in view of UK Prime Minister Boris Johnson’s government reshuffle on Thursday, which saw Chancellor of the Exchequer Sajid Javid resign.

Those who lost their job included energy minister Claire O’Neill, who had been named to lead the November talks in Glasgow. Alok Sharma was appointed to the position as her replacement.

Efforts by businesses, investors and financial institutions to disclose climate risk are gathering pace.

BlackRock, the world’s largest money manager with nearly $7 trillion in assets under management, said this month that it would take a tougher view of companies that were not properly disclosing their climate risk.

This week, BP set out one of the oil sector’s most ambitious targets for curbing carbon emissions, saying it would reduce its greenhouse gas emissions to net zero by 2050. The fossil fuel giant plans to give more details about the plan later this year.

“Last week, very few people would have said BP was Paris-aligned,” said Carney, referring to the 2015 global climate agreement, signed in the French capital. “They’ve jumped from toward back of the queue to the front of the queue.”


Oil slumps more than 4% on coronavirus fears

Updated 28 February 2020

Oil slumps more than 4% on coronavirus fears

  • Traders fret about impact of spreading virus on crude demand, particularly from China

LONDON: World oil prices tumbled by more than 4 percent on Thursday, as traders fretted about the impact of spreading coronavirus on crude demand, particularly from key consumer China.

Brent oil for April delivery tanked almost 4.2 percent to $51.20 per barrel, while New York’s WTI crude for the same month dived nearly 5 percent to $46.31.

“Concerns that the virus will prompt a global slowdown, weaker consumer confidence and reduced travel has raised concerns about lower demand, weighing on prices,” said CMC Markets analyst Michael Hewson.

Investors are growing increasingly fearful about the economic impact of the new coronavirus or COVID-19 outbreak. 

The virus continues to spread meanwhile, with Brazil reporting Latin America’s first case, and Denmark, Estonia, Greece, Georgia, Norway and Pakistan following suit.

Around 2,800 people have died in China and more than 80,000 have been infected. There have been more than 50 deaths and 3,600 cases in dozens of other countries, raising fears of a pandemic.

The spread of the virus to large economies including South Korea, Japan and Italy has raised concerns that growth in fuel demand will be limited. 

Consultants Facts Global Energy forecast oil demand would grow by 60,000 barrels per day in 2020, a level it called “practically zero,” due to the outbreak.

US President Donald Trump sought to assure Americans on Wednesday evening that the risk from coronavirus remained “very low,” but global equities resumed their plunge, wiping out more than $3 trillion in value this week alone.

“The negative price impact would intensify if the coronavirus were declared pandemic by the World Health Organization, something that looks imminent,” said PVM Oil Associates analyst Tamas Varga.

“The mood is gloomy and the end of the tunnel is not in sight – there is no light ahead just darkness. Not even a refreshingly positive weekly US oil report was able to lend price support.”

Gasoline stockpiles dropped by 2.7 million barrels in the week to Feb. 21 to 256.4 million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1 million barrels to 138.5 million.

US crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA said, which was less than the 2-million-barrel rise analysts had expected.

The crude market is watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.

“Oil is in freefall as the magnitude of global quarantine efforts will provide severe demand destruction for the next couple of quarters,” said Edward Moya, senior market analyst at OANDA. 

“Expectations are growing for OPEC+ to deliver deeper production cuts next week.”

OPEC+ plans to meet in Vienna on March 5-6.