London Calling: Climate Warning at Lloyd’s of London October 3, 2015

Short excerpts above from a speech this week, significant not only for who gave it, but for who it was given to.

Mark Carney, Governor of the Bank of England, talks climate with Lloyds of London. Lloyds, of course, as a pre-eminent Re-insurance company – they sell insurance to insurance companies – knows a lot about impacts of climate change.

No deniers in the re-insurance industry.

Below, Re-insurance giant MunichRe’s graph of catastrophic weather events.

Note the greens, blues and yellows in the bars above, represent climate related events. Reds are geological and seismic, ie not climate related.

NYTimes:

Mark Carney, the governor of the Bank of England, declared that the warming climate presented major risks for the global economy and global financial stability, and that businesses and regulators needed to move more quickly to try to contain the potential economic damage even though it may seem uncertain and far off. His warning, delivered in a 4,400-word speech with ample footnotes on Tuesday, is the latest example of how climate change has moved beyond theoretical scientific debates to the start of practical planning for safeguarding the economy and business.

“We don’t need an army of actuaries to tell us that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors — imposing a cost on future generations that the current generation has no direct incentive to fix,” he said. “In other words, once climate change becomes a defining issue for financial stability, it may already be too late.”

– Consider that a housing bubble largely concentrated in a handful of Sun Belt American states, Spain and Ireland set in motion events that eight years ago caused a financial crisis from which the world economy has still not fully healed. It’s easy to imagine how the effects of a shifting climate could similarly ripple through both the financial system and the real economy in ways that are impossible to predict with any precision today. Global insurers are already facing a higher frequency of large, expensive disasters from extreme weather, and in the future could face untold liabilities as the losers from a warming planet try to extract compensation from the (insured) companies that profited from fossil fuel production. It was no coincidence that Mr. Carney delivered his speech at the three-century-old insurer Lloyd’s of London. Those energy extraction industries, which include many of the planet’s biggest companies, could one day face existential risk. If global governments get more aggressive about restricting carbon emissions, it could mean that billions of investment in oil and gas extraction will be rendered useless and undermine both some of the most widely held investments and the government finances of oil-producing regions.

Full Speech (28 min) video below:

Full text here.

Footnotes include such gems as, “Research by Lloyd’s identifies climate change as an important supply-side issue for food security.” Key words, “food”, and “supply”.