Fossil fuel companies are being told that if they ignore the latest climate change deal they will face financial turmoil.

The warning comes from British economist Lord Nicholas Stern who emphasised the importance of the Paris climate change agreement as well as insisting that companies should be required to inform investors of how they will evade these threats.

Lord Stern made his address at a climate task force organised by Mark Carney, Bank of England governor, and also commented that there is an alarming gap between the details of the December Paris agreement and what fossil fuel firms are taking from it.

In his submission to the task group which was chaired by former New York City mayor Michael Bloomberg, Lord Stern says that the difference is alarming for both central bankers and policy makers.

The task force is set up to advance voluntary, uniform standards that organisations can present to investors, insurers and banks to illustrate the ways they are coping with financial risks relating to the climate.

Given that fossil fuels contribute to almost 80% of the world’s primary energy use, it is clear that the world economy is still massively dependant on them despite being a major contributor to greenhouse gases.

The latest Paris agreement states that almost all world countries have agreed to regularly disclose the ways it will deal with greenhouse gases with the ultimate aim of bringing net emissions for the year to zero.

Author of a UK study conducted 10 years ago into the economic implications of climate change, Lord Stern said that unless the shift is handled with caution, assets in fossil fuels could be hit with ‘stranding and mass scrapping’.

His submission states that from the perspective of investors, it is one thing for businesses to think that governments were not being serious in the Paris agreement, but it is too far for them to plan their whole strategy in the hope that this is true.