IN A recent speech, Mark Carney, the Governor of the Bank of England, said ‘a wholesale reassessment of prospects, as climate-related risks are re-evaluated, could destabilise markets, spark a pro-cyclical crystallisation of losses and lead to a persistent tightening of financial conditions: a climate Minsky moment’.

I had to look up what a Minsky moment is; it is a crash!

What Mark Carney is saying is that the share prices of fossil fuel companies could crash.

Later in his speech he says ‘the combined market capitalisation of the top four US coal producers has fallen by over 99 per cent since the end of 2010, and three have recently filed for bankruptcy’.

The reason for his concern is simple – world leaders are committed to restricting the rise in global temperatures to two per cent.

That means that carbon emissions must be restricted to 1,000 gigatonnes of CO2 .

That means that between 60 per cent and 80 per cent of all known fossil fuel reserves must be left in the ground for the foreseeable future.

The problem is that fossil fuel companies are currently valuing the reserves of oil, gas and coal on their balance sheets as if they are going to be exploited and sold; if the reserves have to remain in the ground then their value is much lower.

So the companies will, at some point, have to write down the value of their oil and gas fields.

When they do this, the companies will make losses, have smaller net assets and their share price will fall.

Mark Carney hopes that the fall in share price will happen gradually, but he fears that there could be a ‘Minsky moment’.

That is why I am proposing to Cheshire East Council that they encourage their pension fund to disinvest from fossil fuel companies.

Although there is a strong moral argument for disinvesting from fossil fuel companies, pension trustees are legally prevented from acting on moral grounds and have to act on financial grounds.

Fortunately, in this case the moral and financial cases coincide; fossil fuel company share prices will fall in the future, so unless you want to make a loss you should sell.

Fiona Bruce MP and I will be attending a Christian Aid meeting on Friday at 12.30pm until 1.30pm in the Wesley Centre, Sandbach to discuss how the government intends to reach the emission targets detailed in the 2015 Paris Climate agreement.

Sam Corcoran Labour & Co-operative councillor for Sandbach Heath & East