Banks and investors still pouring trillions into fossil fuels, a decade after being warned of “tragedy on the horizon”

Ten years after a landmark speech calling on banks and financial institutions to steer investment away from fossil fuels, not a lot has happened.

“Increased climate risk disclosure has failed to stop big banks and investors pouring trillions into fossil fuel expansion that’s driving ever worsening economic, social, and environmental damage,” says Market Forces chief executive officer Will van de Pol.

“Australia’s financial institutions and regulators must get on with the job of mitigating climate-related risks, by supercharging investment in renewable energy and ruling out support for new coal and gas.”

The comments came as more than 50 climate finance groups from Australia and the rest of the world have made a plea to banks, insurers and other financial institutions to mark the 10-year anniversary of a seminal speech delivered by Mark Carney.

In 2015, the then-governor of the Bank of England warned climate change was “the tragedy of the horizon” and posed a major threat to the financial system.

Mondays’ statement from the Australasian Centre for Corporate Responsibility, Market Forces and other groups says the tragedy spelled out in the decade-old speech “is not only unresolved, it is growing”.

“Ten years on, the crisis that was once on the horizon is now at our doorstep,” the letter read.

“The financial system is facing instability and potential collapse.”

The climate finance advocates are sounding the alarm as financial institutions worldwide falter in their commitments to managing climate risk.

Australia’s Macquarie Group pulled out of the Net-Zero Banking Alliance earlier this year, following the exit of a number of major US and European institutions from the group bound by a commitment to cleaner lending.

Despite recent backsliding, progress has been made on climate risk management in the financial sector over the past decade, concentrated on climate risk disclosure.

Climate reporting is largely voluntary but Australia has been an early mover on mandatory disclosure, with new rules for large public companies and financial institutions coming into force this year.

The letter, which includes the backing of WWF, US Sierra Club and Finance Watch, argues that transparency via voluntary climate-related disclosures are “essential” but insufficient on their own.

“The idea that better information alone would shift markets has proven flawed.”

“Major new investments in fossil fuel development continue to flow in the billions of dollars and investment in renewable energies remain insufficient.”

The letter calls on central banks and financial regulators to move beyond voluntary disclosure to mandate climate transition plans, including policies that both restrict financing to fossil fuel expansion and funnel more investment into renewables.

The climate groups also want mandatory climate risk disclosure and central banks to align monetary policy with the goals of the Paris Agreement, the global climate pact.

Market Forces, which endorsed the statement, called for “concrete action” from regulators to bring financial institutions into line.

“Increased climate risk disclosure has failed to stop big banks and investors pouring trillions into fossil fuel expansion that’s driving ever worsening economic, social, and environmental damage,” said chief executive officer Will van de Pol.

“Australia’s financial institutions and regulators must get on with the job of mitigating climate-related risks, by supercharging investment in renewable energy and ruling out support for new coal and gas.”

AAP