Companies need to come clean about climate change risk, Mark Carney says

“What is your strategy for managing climate-related risk?” he said. “Longer-term strategies are going to be much more important for evaluation.”

At the same time, he said, the transition to an environmentally sustainable future in the coming decades provides an annual opportunity worth trillions of dollars for companies and financiers. One example he cited is the development of a green bond market in China that current estimates suggest will be worth US$500 billion a year. It’s a market Beijing is keen to open up, he said.

Carney’s comments came during a session with Environment Minister Catherine McKenna at a business breakfast forum.

The former Bank of Canada governor noted that the number of extreme climate events has risen threefold in the last few decades while the cost of claims paid out as a result has risen fivefold.

Still, he said, part of the issue facing regulators relates to the different views on the seriousness of the threat posed by global warming and the ways governments are addressing the problem.

“We want to be neutral, create the information set out there, so that all of those views can be expressed in a market that is an efficient market,” he said.

In response to a request from G20 leaders, Carney said a private-sector task force that includes those who have to provide disclosure and those who use that disclosure is trying to come up with the information needed to allow consistent and effective comparisons among companies about their emissions and the risks they face.

The panel is expected to produce its final report at the beginning of next year.

The reality companies must face and must deal with is that governments around the world are serious about implementing various schemes aimed at lowering emissions believed to be at the root of global warming, Carney said.

“Climate policy is real,” he said. “Emissions have to be capped.”

Speaking afterwards, McKenna said Carney’s comments underline the importance of acting now to reduce emissions as well as the opportunities that creates for Canadian business.

McKenna also said she planned to meet Friday with representatives of 22 major companies that have signed on to the government’s carbon pricing initiative. The program, she said, will lead to lower emissions and foster innovation. She rejected criticism that carbon pricing is simply another tax.

“What it is is pricing pollution. We need to be doing this,” McKenna said. “It doesn’t discriminate: It just says you will pay less if you pollute less.”