Carney deserves praise for his focus on climate change as BofE governor, says ALEX BRUMMER

When Mark Carney, as governor of the Bank of England, put climate change at the top of the agenda, there was a lot of skepticism.

The Bank’s job was to control inflation and prevent a repeat of the 2008-2009 financial crisis, which threatened to wipe out the city and usher in George Osborne’s austerity measures.

Carney, who left to become U.N. ambassador on climate change, had a point.

This year’s hurricane season in the US, which has already claimed 200 lives in North Carolina and ravaged Florida, illustrates this point.

Rachel Reeves’ intention to reinstate climate risk monitoring as a Bank objective seems sensible.

Much of the focus in financial markets in recent trading has been on US inflation figures, which came in at 2.4 percent last month, slightly above expectations.

The cost of living does not appear threatening enough to prevent a further reduction in US interest rates from the current range of 4.75 percent to 5 percent.

If there were any doubt about a rate cut, the hurricanes could be the deciding factor. Oxford Economics notes that about 2.8 percent of U.S. output is in the eye of Storm Milton, which is currently ravaging Florida.

The state has 2,100 kilometers of coastline and a population of 20 million, and is important enough to moderate growth.

This is not the room for a ‘Just Stop Oil’ debate. However, weather events are becoming more common and more expensive.

The numbers show an upward trend and jump from 12 between 1961-1970 to 19 in the years 2011-2020.

The US National Oceanic and Atmospheric Administration estimates the cost to be as much as $1.3 trillion (£1 trillion), or an average of $22.8 billion (£17.5 billion) per storm.

Some of the costs are covered by the federal government’s disaster funds.

However, there is always an insurance risk. In terms of financial stability, the frequency and severity of storms pose serious underwriting and capital challenges.

Estimates in London’s insurance market suggest Milton could cause $100 billion (£76.6 billion) in losses to the global industry.

A charge of this magnitude would have a direct impact on Lloyd’s of London and lead to an increase in reinsurance rates.

Current estimates suggest that Milton could be as big as Katrina in 2005, but that wouldn’t be catastrophic for a sector where risks are well-diversified.

But much the same was said about derivatives built on subprime mortgages that acted as cluster bombs at the heart of the financial system.

However destructive the current season proves to be, its impact on the US should be relatively limited and mainstream insurers should be able to cushion the blow.

Sirens have been sounded for exceptional climate events that could affect stability.

Lost trust

The £10.9 million fine imposed by the council on TSB for its poor handling of struggling families is not looking good.

It’s a bit of a shame for former CEOs, especially Paul Pester, who was in charge from 2013 to 2018.

He resigned after a disastrous switch to a new IT system forced on TSB by new owners Sabadell.

It won’t be entirely welcome for Debbie Crosbie, who took over from Pester and is now in charge of Nationwide and in the process of taking control of Virgin Money.

TSB customers have historically been lower on the income scale than the larger high street banks.

Thus, executives should have recognized the need to prioritize dealing with the most financially stressed customers.

It comes as Spain’s BBVA tries to take control of TSB owner Sabadell with a hostile bid.

Could this be a chink in the armor?

Long goodbye

Unilever has taken a while to break away from Russia, which is a bit noisy considering the ethical claims the country is making.

It argued that it felt loyal to its staff, who did not deserve to be punished for the war in Ukraine.

Not excreting probably made little difference. Moscow’s economy is partly kept afloat by Western goods passing through Asia to avoid sanctions.

Disturbing!