When risks are unknown or ill-defined, the market cannot allocate resources in an efficient and profitable manner. Until recently, reliable information on how companies were anticipating, responding or failing to respond to climate-related risks and opportunities has been hard to find, inconsistent and fragmented. 2  For a full list of current supporters see: https://www.fsb-tcfd.org/tcfd-supporters-march-2018/ and supporters at the Paris Summit see: https://www.fsb-tcfd.org/wp-content/uploads/2017/12/TCFD-Press-Release-One-Planet-Summit-12-Dec-2017_FINAL.pdf 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  The information needed goes beyond the static to the strategic. Markets need information to assess which companies are well positioned to seize the opportunities the transition to a low carbon economy brings. Which car manufacturers are leading the way on fuel efficiency and electrification? How are energy companies adapting their mix of energy sources? This needs to be considered against investors’ views of possible transition paths – the International Energy Agency’s Sustainable Development Scenario, for example, sees the consumption of natural gas rise by nearly 20% by 2030 to become the largest single fuel 3  in the global mix. Given the uncertainties around climate, not everyone will agree on the timing or scale of the adjustments required. And different people will have different views about the effectiveness of timelines of government climate policies. The right information allows sceptics and evangelists alike to back their convictions with their capital. At the same time as this increased investor focus, there have been signs that global companies are becoming increasingly aware of the risks climate change can pose.
The good news is that governments are now establishing the policy frameworks, and the private sector is beginning to allocate capital accordingly. Our efforts will help smooth the transition prompted by these actions. With better information and risk management as the foundations, a virtuous circle is being built with better understanding of tomorrow’s risks, better pricing for investors, better decisions by policymakers and a smooth transition to a low carbon economy. Financing the transition to a low carbon economy is a major opportunity for investors and creditors. It implies a sweeping technological revolution, including investments in long-term infrastructure at roughly quadruple the current rate. As this event testifies, climate finance and risk management is moving into the mainstream. There has been a transition in thinking. And this is now beginning to be translated into action, and the NGFS will play an important role in this. 9  All speeches are available online at www.bankofengland.co.uk/speeches  9