Finance has 'exceptionally important role' to play in UK net zero target - Carney

The financial sector has an "exceptionally important role" to play in achieving a transition to net zero, according to former governor of the Bank of England, Mark Carney.

Speaking at the launch of the Make My Money Matter (MMMM) campaign, Carney emphasised that “finance is not an end in itself, but a means to an end”, clarifying that it’s role should be “helping to finance what society wants”.

He highlighted the Paris Agreement, and transition to net zero, as a “very clear” objective in the UK, with the importance of this target seen across voting patterns and legislation.

Carney added: "The UK is the leader really in many respects of the 125 countries looking to transition to net zero, because that’s what it will take to stabilise the climate.

"Now we have to do it right and we have to do it soon, and finance will play an exceptionally important role, a decisive role in many respects."

He also noted that the current pandemic would likely bring a “strategic reset” for businesses, at a “decisive” time in achieving this “over-arching goal for society of moving towards net zero”.

Carney explained that this was also occurring at “a time of social reset”, emphasising that “ignorance is not an excuse" in terms of funding initiatives that are consistent with addressing climate change and having sustainable growth.

He added: “It is a risk if we wait, close our eyes, and don’t act; but it’s also an enormous opportunity if we do act.”

Also highlighting an “increased focus” on responsible investing over the recent years from the financial sector, Carney explained that campaigns such as MMMM are “pushing on a door that is at least ajar”.

He estimated that there is around £110-115trn of “finance” around the world, that “wants information from companies" around carbon footprints, what they are doing to lower this, and what metrics pension funds and asset managers should look at to determine these factors.

Carney clarified however, that this information then "needs to be communicated to people in a way that’s digestible and understandable" to allow consumers to compare pension funds and other investments, such as ISAs.

He noted that as part of preparation for COP 26, there would be ongoing work to improve industry communications, and ensure that funds are being invested in a way that’s going to help “solve the problem” and move the economy towards net zero.

He continued: “That isn’t a simple box tick or simple index. The people who invest our money need to know which companies in the energy sector, the tech sector, the financial sector are managing themselves towards net zero, and they need to communicate that with us.

"We don’t need simple brown and green, we need 50 shades of green; and we need a way to communicate exactly where things are headed."

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