Carbon reduction opens doors for financial-sector profits
Carney says carbon plan could open door for financial-sector profits
The Globe and Mail
Published Friday, Jul. 15, 2016 9:50AM EDT
Bank of England Governor Mark Carney took his message on climate change to Canada’s financial community Friday, arguing that a uniform framework for corporate disclosure of carbon exposure and strategy could open a new door for financial-sector profits.
Speaking to a large breakfast audience a Toronto Region Board of Trade event, Mr. Carney noted that global carbon reduction commitments imply “somewhere in the area of $5– to $7-trillion a year” in clean infrastructure needs. “The question is, how much of that is going to be financed by the capital markets?”
He said that if there is a “global standard” established for green-infrastructure bonds, it would create “a core mainstream fixed-income opportunity” – noting that China in particular could offer relatively high-yielding products.
He also argued that a uniform global system of corporate disclosure on carbon – something he has been championing, in his role as chairman of the international Financial Stability Board – would better allow equity markets to price in relative risk into company valuations.
“The relative value opportunity in equities is considerable.”
Mr. Carney’s appearance in Toronto came just a day after the Bank of England decided against a widely anticipated interest-rate cut, in its first rate decision following the Brexit vote, and a day after he sat down with Britain’s new finance minister for the first time. He didn’t field any questions on monetary policy or the Brexit result, and didn’t talk to reporters after the event.