Bank of England governor warns over 'worthless' fossil fuel investments

The outgoing governor of the Bank of England, Mark Carney, has warned major companies and financial institutions that assets in the fossil fuel sector risk becoming "worthless" and they should have to justify any such investments to those whose money is being invested in them.

The Canadian is stepping down as head of Britain's most important financial institution in March, before the official end of his designated eight-year term of office, and will take up a role with the United Nations as its climate change and finance envoy.

Carney has spoken before of his concerns about the effects of climate change and the role the financial sector plays in it.

As long ago as 2014, he gave a speech about the so-called Carbon Bubble, warning that significant fossil fuel resources would have to remain unused, rendering the sector less financially attractive, to avoid having a major damaging effect on the world's climate and environment.

Speaking on the BBC Radio 4 Today program, as devastating fires and soaring temperatures in Australia made worldwide headline news, Carney called the climate crisis a "tragedy on the horizon" and urged immediate political action, warning that "by the time that the extreme events become so prevalent and so obvious, it will be too late to do anything about it".

Pension funds

When asked if pension funds should withdraw from fossil fuels even if their current rate of return seems attractive, Carney replied: "Well, that hasn't been the case, but they could make that argument. They need to make the argument－to be clear about why is that going to be the case if a substantial proportion of those assets are going to be worthless."

Companies, he continued, needed to make a judgment call on behalf of their investors over whether they should withdraw funds.

"A question for every company, every financial institution, every asset manager, pension fund or insurer－what's your plan?" he added.

He also expressed his anger at climate change doubters, saying: "We can't afford on this one to have selective information, spin, misdirection."

Previously, Carney has spoken of the positive opportunities offered to investment organizations willing to take the step and invest in other areas.

"There will be industries, sectors and firms that do very well during this process because they will be part of the solution," he told the Guardian newspaper in October. "But there will also be ones that lag behind, and they will be punished."

Carney will leave his post with the Bank of England in March, following a three-month handover period with his successor, Andrew Bailey, the bank's former chief cashier and head of the City of London financial watchdog, the Financial Conduct Authority.