- Mark Carney, Governor Bank of England
Financial Collapse Warning
Writing in ‘The Guardian’, Damian Carrington, their environmental editor reports that Mark Carney, the Bank of England governor, has led efforts to address the dangers global heating poses to the financial sector.
Dire Global Transition Needed
Companies and industries that are not moving towards zero-carbon emissions will be punished by investors and go bankrupt. Mark Carney also told the Guardian it was possible that the global transition needed to tackle the climate crisis could result in an abrupt financial collapse. He said the longer action to reverse emissions was delayed, the more the risk of collapse would grow.
Global Heating Dangers
Carney has led efforts to address the dangers global heating poses to the financial sector, from increasing extreme weather disasters to a potential fall in asset values such as fossil fuel company valuations as government regulations bite. The Guardian revealed last week that just 20 fossil fuel companies have produced coal, oil and gas linked to more than a third of all emissions in the modern era.
Fortunes Down & Up
“There will be industries, sectors and firms that do very well during this process because they will be part of the solution,” he said. “But there will also be ones that lag behind and they will be punished.”
90% Drop in Value
The central bank governor said transition to net zero carbon emissions would change the value of every asset, raising the risk of shocks to the financial system.
“Some [assets] will go up, many will go down. The question is whether the transition is smooth or is it something that is delayed and then happens very abruptly. That is an open question,” he said. “The longer the adjustment is delayed in the real economy, the greater the risk that there is a sharp adjustment.”
In April, Carney said: “The stakes are undoubtedly high, but the commitment of all actors in the financial system to act will help avoid a climate-driven ‘Minsky moment’ – the term we use to refer to a sudden collapse in asset prices.”
Action for Growth
Far from damaging the global economy, climate action bolsters economic growth, according to Carney. “There is a need for [action] to achieve net zero emissions, but actually it comes at a time when there is a need for a big increase in investment globally to accelerate the pace of global growth, to help get global interest rates up, to get us out of this low-growth, low-interest-rate trap we are in.”
Consequences of Failure
Failing to act would have severe consequences, he said. “I don’t normally quote bankers, but James Gorman, who is the CEO of Morgan Stanley, said the other day: ‘If we don’t have a planet, we’re not going to have a very good financial system.’ Ultimately, that is true.”
The UK remained a climate leader, Carney said, and could benefit from action as a climate-smart financial centre and zero-carbon industrial force.
UK ‘Most Sophisticated’
2 Year Deadline
Carney told big corporations they had two years to agree rules for reporting climate risks before global regulators devised their own and made them compulsory. Reacting to the Guardian’s revelations about fossil fuel companies, Jeremy Corbyn, the leader of the UK Labour party, said: “Labour will delist companies that fail to meet environmental criteria from the [London Stock Exchange], and reform the finance sector to make it part of the solution to climate change instead of lending to companies that are part of the problem.”
‘Low Energy Buildings’ – the key
After many years promoting ‘Low Energy Buildings’, it’s great to hear Mark Carney’s intervention. And to know that we are absolutely in the right place, both to help you, your buyers or tenants, and to press on with our business innovations and developments. This really requires engaging the whole team responsible for delivery on time and within budget. It requires a systematic, solution driven approach which brings discipline to the process, sharing information and communications. DfMA defines the process of taking these to the next level; a welcome change in the overall approach to project management and development.
Partnering for Progress
All of this entails a shift in thinking to that already practiced by established ‘Off-Site’ MMC manufacturers. It can be quickly and easily incorporated into procedures and processes of building and development. Better still, you can make partnering arrangements with such manufacturers to gain all round benefits.
Greater Speed, Accuracy, Quality and Lower Costs
Greater collaborative ‘partnering’ between architects, builders and manufacturers will deliver these. The greater speed, accuracy and quality that can result from manufacturing components in a dry, controlled factory environment, together with the ability tom incorporate (yet to be invented) ‘Smart Ware’ gives home builders perhaps the only way of achieving this, together with improved on-site build quality AND controlling costs.
While resistance to the change to DfMA has been the norm, the wish of most UK Builders to deliver excellent customer service and top notch homes is now driving an increasing number to choose Off-Site for their developments. Also, as ‘OffSite Hub” note, architects and designers are moving toward DfMA, something we have been encouraging for over 20 years. The emergence of LA Developers will only speed up this process.
Easy Timber Frame
To assist them in doing so our “Easy Timber Frame “ now offers standard size modular timber frame elements for them to use as a design base, cutting down on technical design and engineering to produce win-win results. This virtually provides any housebuilder or architect with their own bespoke design factory facility.