Capitalism is “very much part of the solution” to tackling the climate crisis, according to the governor of the Bank of England, Mark Carney.
Challenged in an interview by the Channel 4 News presenter Jon Snow over whether capitalism itself was fuelling the climate emergency, Carney gave a strident defence of the economic system predicated on private ownership and growth but said companies that ignored climate change would “go bankrupt without question”.
“Capitalism is part of the solution and part of what we need to do,” he said in the interview broadcast on Wednesday.
“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. So if you flip it around, there’s huge risks but there’s huge opportunity.”
Carney was interviewed at Coutts Bank in central London on Tuesday evening, where Sir David Attenborough told bankers and financiers the planet was in mortal danger and they “simply must act”.
Many experts argue that ending the crisis would necessitate the end of capitalism and the introduction of a new economic model, due to the constant pursuit of GDP growth in capitalist economies. Others argue that capitalism harnesses innovation, which is key to the Earth’s survival and future prosperity – citing rapid advancements in renewable and clean energies.
The economist, who previously worked for Goldman Sachs, said he recognised that the costs of ignoring climate change were rising, but stressed there were increasing opportunities for “doing something about it”, and that capital would shift in this direction.
“Now there is $120tn of capital behind that framework that is saying to companies: ‘Tell us how you are going to manage these risks’ – that’s the first thing,” Carney said.
“The second thing the capitalist system needs to do is to manage the risks around climate change, be ready for the different speeds of the adjustment. And then the most important thing is to move capital from where it is today to where it needs to be tomorrow. The system is very much part of the solution.”
He added: “Companies that don’t adapt – including companies in the financial system – will go bankrupt without question. [But] there will be great fortunes made along this path aligned with what society wants.”
Carney has been governor for six years and is expected to step down in January, with efforts already under way to find his successor.
In April, Extinction Rebellion activists glued themselves to the London Stock Exchange wearing LED signs saying “Climate emergency”, “Tell the truth” and “You can’t eat money”.
The group said: “The world’s top banks have poured £1.5tn into fossil fuel financing since the Paris agreement just over three years ago, with this financing on the rise each year. Countless billions more fund projects which lead to rainforest destruction, industrial agriculture and other ecologically catastrophic projects.”
The UK has committed to eliminating carbon emissions by 2050 through legislation passed last month. However, analysis published this week by the Labour party showed this target would not be met if the UK fully exploited the shale gas reserves in the country through fracking.