Overview
In September 2015, Mark Carney, then Governor of the Bank of England and Chair of the Financial Stability Board, delivered a speech at Lloyd’s of London called “Breaking the Tragedy of the Horizon.” The title named a problem that had existed for years but had never been framed so precisely for a financial audience: the people responsible for managing financial risk operate on short time horizons, while the most severe climate impacts will materialise decades into the future. Markets, left to their own devices, will systematically underprice that risk.
The “tragedy of the horizon” is not a technical term from economics, Carney coined it as a way of communicating a structural market failure to an audience of bankers and insurers. Climate change sits beyond the typical business cycle, beyond most investment mandates, and beyond most political terms. No individual actor has strong incentives to price it in fully. Carney argued this made climate change a systemic financial risk, the kind that regulators and central banks have a responsibility to address.
The speech shifted the conversation. Before 2015, climate risk was largely treated as an environmental or reputational concern. After, it entered the vocabulary of central banking, prudential regulation, and financial stability. The intellectual architecture Carney laid out in that speech directly led to the creation of the TCFD.
The TCFD and the Disclosure Architecture
As Chair of the Financial Stability Board (FSB), the international body that monitors global financial stability, Carney established the Task Force on Climate-related Financial Disclosures in 2015. The TCFD was designed to give financial markets a standardised way to understand and report climate-related risks. Its four-pillar framework, governance, strategy, risk management, and metrics and targets, became the template for virtually every subsequent climate disclosure framework.
Carney’s logic was straightforward: if markets are going to price climate risk properly, they need consistent, comparable, decision-useful information. Voluntary disclosure initiatives had produced a cacophony of incomparable data. The TCFD was an attempt to impose enough structure to make disclosure actually useful. That framework was later absorbed into mandatory standards through IFRS S1 and S2 and the CSRD.
GFANZ and the Net Zero Finance Moment
After leaving the Bank of England, Carney became UN Special Envoy on Climate Action and Finance. In that role, he co-chaired GFANZ, the Glasgow Financial Alliance for Net Zero, launched at UNFCCC and COP COP26 in 2021. GFANZ was the most visible attempt yet to mobilise the financial sector as an active participant in the net-zero transition, rather than a passive allocator of capital.
The ambition was significant: an umbrella body representing banks, asset managers, asset owners, and insurers, all committing to align their portfolios with net-zero by 2050. At its peak, GFANZ represented over $130 trillion in assets under management. The political and communications weight of that number was enormous, and also contested, since critics argued the commitments were vague and the accounting was loose.
Legacy and Controversy
Carney’s influence on climate finance is difficult to overstate, he helped move the conversation from environmental advocacy to financial regulation, a shift that made the topic legible and urgent to audiences that had previously tuned it out. The concept of Stranded Assets, the framework of Physical Risks and Transition Risks, and the entire architecture of scenario-based climate disclosure all trace intellectual roots to the “Tragedy of the Horizon” moment.
The legacy is not without complications. GFANZ faced significant political backlash in the United States, where several major banks withdrew from its banking sub-alliance, the Net Zero Banking Alliance, citing antitrust concerns and political pressure. This exposed a tension at the heart of Carney’s project: voluntary private-sector coalitions are vulnerable to political winds in ways that regulatory mandates are not. The question of whether voluntary commitments can drive systemic change, or whether mandatory frameworks are required, remains live.