Mark Carney, the kid from Fort Smith, N.W.T., studied at Harvard, then got his master’s and doctorate in economics from Oxford, where he was also goalie and co-captain of the Oxford ice-hockey team. Playing alongside him was his co-captain, David Lametti — now Canada’s Justice minister.
After a stint at Goldman Sachs, and three years in Canada’s Finance department under both Liberal and Conservative governments, Carney was named governor of the Bank of Canada as the world staggered into the 2007-08 financial crisis.
That crisis, along with COVID-19 and climate change, are the three catastrophic events that form the backdrop of Carney’s book, Value(s): Building a Better World for All.
From the Bank of Canada, Carney became the first non-Briton to serve as governor of the Bank of England, but left in 2020 as Britain was entering the unknown waters of Brexit and COVID was becoming a worldwide pandemic.
Back in Canada, the former goalie and central banker is now vice-chair and head of ESG (Environmental, Social, and Governance) at Brookfield Asset Management. He’ll also be the United Nations’ special envoy on climate action and finance at the COP26 international climate-change conference in Glasgow, U.K., in November.
British Prime Minister Boris Johnson, who’s hosting the COP26, has named Carney his financial adviser during the summit. Carney hopes that the global leaders in banking, insurance, and regulation who attend it will commit to net-zero greenhouse-gas emissions (GHGs), which he considers not just key to fighting climate change, but to improving economies, as well.
Conservative commentators, such as Peter Foster of the Financial Post, believe Carney’s plans amount to heavy-handed interventionism.
But the world was unprepared for the three crises, Carney writes; it must now get ready for future financial crises, pandemics — and, more immediately, climate change.
Carney’s thesis — that the “value” of financial markets should be pegged to human “values” — has been met with horror by the likes of Foster, who consider it market heresy.
Rather than subscribing to the idea that shareholders’ interests are paramount, Carney would favour “stakeholders,” including employees and society at large.
Carney also believes more diversity would benefit the financial world, which tends to “only hire from certain schools and certain disciplines,” he said.
When Carney was at the Bank of England and Christine Lagarde was head of the International Monetary Fund (IMF), she told Carney the IMF had “tremendous diversity,” with over 150 nationalities.
The only problem, Lagarde told Carney, was “they all had PhDs in economics from MIT.”
“Here’s a secret,” Carney said in an interview on Friday with Sophie Cousineau at the Montreal Council on Foreign Relations. “Finance isn’t that hard. It can be taught on the job. In fact, it’s people who don’t necessarily come from those disciplines (who) are often better at it.”
Cousineau, a former journalist, is now vice-president of sustainable investment, risk, and ESG at the Caisse de dépôt et placement du Québec, an institutional investor that manages public pension plans and insurance programs in Quebec.
Carney told her that market fundamentalism creates risks by leaving society unprepared.
“That is the problem,” he said.
In his book, Carney praises the private sector for the role it can play in solving climate change, but denounces the “three lies” of the market, chiefly what he terms, “the four most expensive words in the English language: This time is different.”
The other two “lies” Carney identifies are that markets are always clear and markets are moral, noting that the market events of 2007 and 2008 showed that when markets are out of control, the result is often the opposite of clear and moral.
He also questions the morality of a banking crash that hurts ordinary people.
When Cousineau asked him about criticism that last week’s G7 summit in Cornwall was disappointingly light on climate-change commitments, Carney replied, “We have made progress, but the problem is huge.
“I think a sense of urgency is growing,” he added, noting that 70 per cent of countries have now signed on to the goal to emit net-zero GHGs.
Carney would like to see a world carbon tax, although, after the G7 summit, he doesn’t believe it will happen. He’s also in favour of using existing technologies for carbon offsets, with the goal of reducing GHGs by 60 per cent.
Carney hopes that countries attending COP26 in November will recommit to holding down the increase in the average world temperature to 1.5 C, although the International Energy Agency believes that, according to current stated goals, a 2.1 C increase is more likely, while the Earth’s average temperature will go up by 2.6 to 2.7 C, if government policies stay the same.
Carney is also worried that the G7 commitment to provide two billion COVID vaccines to the world’s poorest countries is “still insufficient.”
“COVID isn’t over anywhere until it’s over everywhere,” he said. “At this time, we have momentum on climate, but we need to have momentum on health, or we will lose momentum on both.”
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