Bank of England Warns: Huge Financial Risk From Fossil Fuel Investments

"Global action on climate change could cause insurers’ investments in fossil fuels to take a huge hit, says bank’s prudential regulation authority"

"Insurance companies could suffer a 'huge hit' if their investments in fossil fuel companies are rendered worthless by action on climate change, the Bank of England warned on Tuesday.

'One live risk right now is of insurers investing in assets that could be left ‘stranded’ by policy changes which limit the use of fossil fuels,' said Paul Fisher, deputy head of the bank’s prudential regulation authority (PRA) that supervises banks and insurers and is tasked with avoiding systemic risks to the economy.

'As the world increasingly limits carbon emissions, and moves to alternative energy sources, investments in fossil fuels – a growing financial market in recent decades – may take a huge hit,' Fisher told an insurance conference. He said there 'are already a few specific examples of this having happened', but did not name them, and added that it was clear his concerns had yet to 'permeate' the sector."

Damian Carrington reports for the Guardian March 3, 2015.