At the end of March, San Francisco’s Federal Reserve board issued an “economics letter” which argued that “in the coming decades, climate change . . . will have increasingly important effects on the US economy” that, it said, are “relevant considerations” for the central bank.
Nothing odd about that, you might think. If you live in California it is almost impossible to ignore climate issues given the devastating impact of recent wildfires (among other climate shocks). But this bland statement of the obvious conceals a startling tale of change which investors cannot afford to ignore — irrespective of their views on climate science.
Until four years ago, central bankers almost never talked about climate change. But in September 2015 Mark Carney, governor of the Bank of England, created a frisson among the tribe of (mostly) faceless financial bureaucrats by declaring that climate change had become a financial stability risk.