Carbon Risk and Green Finance

1 Climate change becomes a financial concern

On a fall evening in 2015, one of the world’s most esteemed bankers argued for addressing climate change. The head of the Bank of England, Governor Mark Carney, said the following at an exclusive business dinner gathering in London.

There is a growing international consensus that climate change is unequivocal. Many of the changes in our world since the 1950s are without precedent: not merely over decades but over millennia.

(Carney 2015)

In what started out as a speech one would expect from an environmentalist rather than a financial regulator, Governor Carney went on to describe how climate change presents serious financial risks. He explained that some carbon risks were already observable, such ...