Companies that fail to respond to climate change 'will go bankrupt without question', Mark Carney warns

Bank of England governor says efforts to reverse global warming will lead to 'major changes' in UK economy

Companies that fail to respond to the challenges of climate change “will go bankrupt without question”, the governor of the Bank of England has warned.

Mark Carney said banks and insurance companies were among firms threatened by growing efforts to tackle global warming, which he said would result in “major changes” to the economy.

But he insisted that capitalism was "part of the solution” to addressing the crisis and said there would be “great fortunes made” by companies that understood this.

Earlier this month, the government ordered the Bank of England to assess the readiness of the UK financial system to cope with changes that will result from climate change and attempts to tackle it.

Mr Carney warned businesses that they will go bust if they fail to respond to efforts to reverse global warming.

He told Channel 4 News: “Companies that don’t adapt, including companies in the financial system, will go bankrupt without question.

“[With] any major structural change there are companies that are not ready, that move too slowly, that cannot adapt, and that will happen.

“But also…there will be great fortunes made along this path aligned with what society wants.”

Mr Carney said the government’s target for the UK to be net carbon zero by 2050 would “require some pretty major changes to how the economy functions” and urged banks, asset managers and insurance companies to consider how the shift away from carbon fuels will affect their investments.

He gave the example of the recent clampdown on the use of plastics, predicting that in certain scenarios it would “become more and more costly to use plastic in packaging” as consumers become more environmentally aware.

He said: “People don’t like to walk around with plastic bottles anymore, more and more people don’t, so there will be a cost to that."

Sir Mark said it was "a mistake” to believe that the use of fossil fuels will not be significantly reduced and hinted that companies should turn their focus towards more renewable forms of energy. He said: “The most important thing is to move capital from where it is today to where it needs to be tomorrow”.

The Bank of England governor also dismissed suggestions from some environmental campaigners that capitalism and the pursuit of economic growth is not compatible with reversing climate change.

He said: “Capitalism is part of the solution and part of what we need to do. Remember what we need to do in going from here to where we need to get to – these are tens of billions, in fact trillions of pounds of investments that take place in the UK, across Europe across the world.”

Mr Carney appeared alongside Sir David Attenborough on Tuesday at an event for people in the financial sector on the risks and opportunities posed by climate change.

Sir David warned the audience that the planet was in great danger and told them that they “simply must act”.