TORONTO The trillions needed to fund global carbon reduction commitments in the coming years is a big opportunity for investors, Bank of England Governor Mark Carney said Friday in a speech to Toronto's financial community.
Carney, formerly the Bank of Canada governor, spoke at the Toronto Region Board of Trade with Catherine McKenna, the minister of environment and climate change. He said that given the enormous funding needs for clean infrastructure - he estimated at somewhere between $5 trillion and $7 trillion a year - investment opportunities will abound.
It will be up to capital markets on whether they recognize that opportunity and get involved in funding.
"If we get carbon disclosure right, the relative value opportunity in equities is considerable," said Carney.
Last year, Carney and former New York City mayor Michael Bloomberg launched a task force to create voluntary financial risk disclosure guidelines for investors as more and more companies transition to a low carbon economy.
Carney has used his position as chair of the Financial Stability Board to create awareness about the growing risk that the worsening impacts of climate change and the transition away from fossil fuels poses to the financial sector.
"[Carbon pricing] is the cleanest way for markets to judge the tangible exposure to climate change," said Carney.
He said that more disclosure would allow investors to see who's leading and lagging in adapting to a low carbon world, which would better allow capital markets to make the right investments. Carney also championed infrastructure bonds, which he said Friday would create a "fixed-income opportunity." He said Chinese green bonds could offer investors higher income in a world starved of yield.
Carney said that it would be up to governments to help develop a global stand for clean assets and to help ensure the correct disclosure policies are adopted.
"It is less expensive for an economy as a whole to adjust early," he said.