Happy days: Mark Carney is the new $1-a-year UN special envoy on climate action


ALEX BRUMMER: Not many governments are going to sacrifice their grip on power by listening to the climate change apparatchiks gathered in Paris

The choice of Mark Carney as the $1-a-year UN special envoy on climate action is a reminder that Brexit stalemate and the election means we still don’t know who will be in charge of the Bank of England after January 31.

The notion that it is good practice for market confidence to get the next governor in place early has gone by the board.

Carney’s new job also should sharpen the focus of Whitehall and corporate Britain of the need for radical change if the UK is to be at the forefront of green initiatives.

Happy days: Mark Carney is the new $1-a-year UN special envoy on climate action

As far as Carney’s replacement is concerned, the short window means (to use a Boris Johnson term) that the Government needs an oven-ready candidate.

The name which frequently comes up is former deputy governor for markets Minouche Shafik, director of the London School of Economics.

Doubtless if Labour wins it will have its own candidate, but the proposed shift in the size of the state will make it imperative that the choice is someone who can command the confidence of traders and strategists.

Carney has been banging the drum on climate change since 2015. Among his concerns is that the mispricing of assets by banks could quickly deplete the value of securities. Activist hedge fund manager Christopher Hohn of TCI is demanding major corporations step up their emissions disclosure.

Hohn is right on the need for practical solutions. But Labour’s manifesto proposition of green transformation by creating 1m jobs and insulating every house in Britain for free is not credible.

The green workforce doesn’t exist nor does the money, even if, as proposed, North Sea oil is clobbered.

The International Monetary Fund argues that if global warming is to be halted, taxes on carbon need to be raised to $75-per-ton by 2030, which in turn would lift electricity prices by an average of 43 per cent.

Given that the global average carbon price is $2-a-ton, the disruption would be enormous. The IMF notes that Sweden’s carbon tax of $127-a-ton has already slashed emissions by 25 per cent.

But everyone who believes higher carbon taxes are the way to go risks a terrible fallout. In Chile, a rise in tube fares brought riots to the streets. In France, the ‘gilets jaunes’ protesters were provoked by a rise in motoring taxes.

The IMF has long advocated an end to fuel subsidies, but each time this is made a condition of a loan, it ends in political calamity. A kinder, gentler IMF now suggests that if green taxes are accompanied by income support the transition could be smoothed. It is a brave agenda. Not many governments are going to sacrifice their grip on power by listening to the global apparatchiks gathered in Paris.

Troublemakers

Carney asserts that companies representing £92 trillion of global assets are up for greater climate change transparency.

Heaven help them if they are not, according to private equity group Alvarez & Marsal. It suggests in its annual activist report that firms which fail to embrace the environment are more likely to be targeted.

The UK remains top of the pops for activists, which is not that surprising given that FTSE valuations would appear to offer the most upside, with the main indexes trading at a 12.5 per cent discount to the Continent. Europe is coming up on the rails with some 158 companies seen to be vulnerable in 2020, up from 150 this year.

All bets will be off should Labour win in ten days.

Aside from the long list of proposed nationalisations, to which we must add ticketing pioneer Trainline, all companies with more than 250 employees are in danger of seeing 10 per cent of their shares confiscated for the workers. That should be scary enough to keep Elliott Management, Carl Icahn et al off the register.

John McDonnell has stumbled on a way of keeping predatory capitalism at bay.

Fashion victim

A nasty secret of the high fashion industry is the amount of surplus clothing destroyed each year as part of the effort to maintain exclusivity.

Ted Baker has a different approach. It has overstated its stocks of stylish garments by as much as £25m, thereby making its balance sheet look stronger than it actually is.

The latest fall in Ted Baker’s share price makes it a sitting duck if founder Ray Kelvin wants to win his way back by executing a bear hug.



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