Agents of change − speech by Sarah Breeden

The Bank of England's deputy governor for financial stability has called on the financial sector to embrace the changes required by the transition to a low-carbon economy, arguing that the risks of inaction are greater than the costs of adaptation.

In a speech delivered at a sustainable finance conference, Sarah Breeden said the financial system had made progress in understanding and managing climate-related risks but that the pace of change was still too slow. She identified three areas where faster progress was needed: the integration of climate risk into mainstream financial decision-making, the development of markets for green financial products, and the alignment of financial regulation with the government's climate objectives.

Breeden's speech was notable for its emphasis on the opportunities of the transition rather than its risks. She argued that the shift to a low-carbon economy would be one of the largest investment programmes in history and that the financial sector that positioned itself to support that transition would benefit accordingly. "This is not just about managing risk," she said. "It is about seizing opportunity."

The speech also addressed the criticism that central banks were exceeding their mandates by involving themselves in climate policy. Breeden argued that climate change was a material risk to financial stability and that the Bank's involvement was therefore a core part of its statutory responsibilities. "Ignoring a risk because it is politically contentious is not prudence," she said. "It is negligence."