Businesses will cease to exist if they fail to take climate change seriously, the heads of two central banks have warned.
The Bank of England governor Mark Carney and François Villeroy de Galhau of France issued the stark warning in an unprecedented open letter.
In it, they said climate change was a threat to the global economy and that if industries failed to adjust they would ‘fail to exist.’
Their letter was also signed by the head of the Network for Greening the Financial System (NGFS), an alliance of 34 central banks formed in 2017.
Mr Carney and Mr Villeroy de Galhau’s letter warns of the ‘catastrophic effects’ of climate change which are already being felt.
They include ‘blistering’ heatwaves in North America, droughts in Africa and Australia and typhoons in south-east Asia.
Their letter adds: “These events damage infrastructure and private property, negatively affect health, decrease productivity and destroy wealth”.
The NGFS has also issued a report, claiming that global warming could trigger mass migration, political instability and conflict across the world.
The NGFS report said: “Carbon emissions have to decline by 45 per cent from 2010 levels over the next decade in order to reach net zero by 2050.
“This requires a massive reallocation of capital…. while urgent action is desirable, an abrupt transition could have an impact on financial stability and the economy.”
Carney and Villeroy de Galhau want businesses to make climate change planning part of their daily routine.
They say central banks should lead by example by making their own organisations more sustainable.
The pair also want to see more collaboration within the financial sector, with companies sharing information about how they are dealing with climate risks.
They add: “An important element to achieving effective consideration of climate risks across the financial system is to support internal and external collaboration.”