The conversations I have had with leaders in the financial sector over the past few years make it clear that this issue is increasingly recognised as being central to business strategy, not just the confines of Corporate Social Responsibility departments. We have now entered the far more difficult second phase, where we must answer the question of how to turn aspiration into action. That means collecting data, building tools and frameworks that enable changes in strategy and risk management. The publication this week of the CFRF guide and the NGFS reference scenarios is a sign we are making good progress here. The third and final phase - which I hope we are fast approaching - is using these tools to make financial and business decisions that progress us on that orderly transition to net-zero. And developing the metrics that will assure us that collectively we are doing enough. 24 25  See research from BlackRock and Morningstar Morningstar reports total assets in global sustainable funds of $ at end 2019 9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  I’ve set out today how the financial sector can play its part in answering perhaps the greatest call to action in its history and the Bank’s role in supporting this. We have already taken the first steps. Now is the time to use what we have learned to make real progress on our journey. To be strategic not responsive.
Finally, the size and balance of future risks will be determined by actions taken in the next decade – probably in the next three to five years.4  So we need leaders like you to take bold steps and adopt a forward-looking strategic view of the risks - and the opportunities - from climate change. That means stretching beyond your typical business planning horizons and taking different decisions today, decades before the consequences of inaction become clear. Size of the challenge  I am not going to pretend this will be easy. The size of the challenge is enormous. To put it in perspective, the International Energy Agency’s (IEA) Global Energy Review estimates that as a consequence of the pandemic lockdown, global CO2 emissions will decline by around 8% by the end of this year.5 And yet to meet a rise in global temperatures of 1.5 degrees in line with the recommendation of the Intergovernmental Panel on Climate Change (IPCC)6, we would need to reduce emissions by a similar order of magnitude every year for the next decade.7  The pandemic has thus brought sharply into focus the human and financial costs of disorderly adjustments in the economy. We cannot afford to repeat this experience. Rather we need to achieve net-zero emissions in a different, orderly way.