The Bank of England has put insurance companies on notice that their fossil fuel investments may be at risk as the world takes serious action to confront climate change.
“One live risk right now is of insurers investing in assets that could be left ‘stranded’ by policy changes which limit the use of fossil fuels,” the deputy head of the bank’s prudential regulation authority (PRA), Paul Fisher, told an industry conference last week.
“As the world increasingly limits carbon emissions, and moves to alternative energy sources, investments in fossil fuels—a growing financial market in recent decades—may take a huge hit.”
He confirmed that the Bank will be reporting to the UK government on fossil fuel investment risk later this year.
“It is encouraging to see this major central bank seeing the need to move with the times and understand its role in dealing with one of the major challenges facing our economies today,” James Leaton, research director at the Carbon Tracker Initiative, told the Guardian. “We hope to see other financial regulators around the world responding in a similar fashion and collaborating on this issue.”