Have Mark Carney’s views changed since 2015?

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Last week Mark Carney, the former governor of the Banks of Canada and England, gave a widely reported speech on the future of commercial real estate.  In the years since he stepped down from his public positions, Dr Carney has become a leading light in the sector, serving as the Chair of Brookfield Asset Management since 2020.  

His public utterances are noteworthy, in part, because of a speech he gave in 2015 while at the Bank of England, one which sparked widespread regulatory interest in climate-related risks to the financial system.

His most recent remarks concerned older buildings and the challenges upgrading them to cope with tighter emissions and energy efficiency standards.  He warned that many of these buildings “aren’t going to make it” because the cost of upgrade will exceed the economic value that owners will be able to extract from the assets.  In Dr Carney’s view, there will be “significant stranded assets” in the sector.

Before I get into the weeds, I just want to make a comment on the communication of financial risks related to climate change.  There are many different phrases that have been developed in the scientific community to describe climate impacts.  “Stranded asset” is one of them.  It is normally used to refer to coal, oil, and gas reserves that will be rendered valueless as the low-carbon transition accelerates.  Another is “tipping points”, temperature thresholds beyond which certain climate change consequences become irreversible, like the melting of a glacier or the loss of an (ant)arctic ice shelf.