Remarks given at a panel to launch the third annual America’s Pledge report, at the 25th Annual Conference of the Parties Mark Carney Governor of the Bank of England  US Climate Action Centre, Madrid 10 December 2019  I am grateful to Jennifer Nemeth for her assistance in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Introduction The Accelerating America’s Pledge report comprehensively documents the scale of change that is needed across our economies to put emissions on a trajectory consistent with building a net zero economy. That will require a more sustainable financial system. Changes in climate policies, new technologies and growing physical risks will prompt reassessments of the values of virtually every financial asset. Firms that align their business models with the transition to net zero will be rewarded handsomely. Those that fail to adapt will cease to exist. Now is the time to ensure that every financial decision takes climate change into account. For that change to happen, we need to focus on the three Rs – reporting, risk management and return. First, reporting In 2015, G20 leaders tasked representatives from the public and private sectors to review how the financial system takes into account climate risks. We established a Task Force on Climate-related Financial Disclosures (TCFD), chaired by Mike Bloomberg. Four years on, the TCFD has generated a step change in both the demand for and supply of climate reporting. The demand for TCFD disclosure is now enormous.

Current supporters control balance sheets totalling $ trillion and include the world’s top banks, asset managers, pension funds and insurers. The supply of disclosure is responding, with four fifths of the top 1100 global companies now disclosing climate-related financial risks in line with some of the TCFD recommendations. On every recommended metric in TCFD, disclosures have been steadily increasing. Three quarters of major investors surveyed are now using available TCFD disclosures when investing. Mike Bloomberg’s path-breaking initiative on climate disclosure is creating the platform to bring sustainable to the finance mainstream. Now we must build on this foundation by: First, over the next year, enhancing both the quality and quality of disclosures to make TCFD standards as comparable, efficient and as decision-useful as possible. And, by COP26, exploring pathways to make TCFD disclosure mandatory. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  Second, risk management For the market to understand where climate risks and opportunities lie, disclosures need to go beyond the static to the strategic. That means assessing the resilience of firms’ strategies to transition risks. This is hard. Only half of TCFD supporters systematically conduct scenario analysis and, of those that do, three fifths don’t disclose it. Fortunately, a number of promising initiatives are currently in train to build best practice. First, TCFD case studies – from Rio Tinto to Unilever and Citi – detail characteristics of good scenario analysis. Second, the TCFD Knowledge Hub provides guidance, research, tools, standards, frameworks and webinars.