A group containing some of the UK's most influential green business leaders and campaigners has written to Bank of England governor Mervyn King, calling on him to address the "systemic" risk to financial systems presented by the potential over-valuation of high carbon companies.

The open letter is signed by 20 leading green investors and campaigners, including Paul Abberley, chief executive of Aviva Investors London, James Cameron, founder and vice-chairman of Climate Change Capital, Solarcentury chairman Jeremy Leggett, former chief scientist Sir David King, and Conservative MP Zac Goldsmith, as well as the directors of Greenpeace, WWF, the Green Alliance, and the Climate Group.

It argues that in his new role as the chair of the recently created Financial Policy Committee (FPC) King has been tasked with "identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system" and, as such, the committee should "investigate how the UK's exposure to high carbon investments might pose a systemic risk to our financial system".

It also urges the FPC to look at "what the options might be for managing this potential threat to our economic security".

The detailed letter builds on a report last year from the recently launched Carbon Tracker Initiative, which warned that the valuation of the world's leading energy and fossil fuel companies was largely based on reserves that they cannot extract and burn if the world is to meet governments' stated aim of reducing average temperature rises to two degrees.

"The depth and breadth of our collective financial exposure to high carbon, extractive and environmentally unsustainable investments could become a major problem as we transition to a low carbon economy," the letter warns. "Five of the top 10 FTSE 100 companies are almost exclusively high carbon and alone account for 25 per cent of the index's entire market capitalisation."

It goes on to argue that the valuations of many carbon-intensive firms are based on the assumption that they can continue to sell their fossil fuel assets, despite the fact a raft of new policies and technologies are committed to reducing demand for fossil fuels.

"As policy and technology work consistently over time to reduce returns in high carbon areas, while supporting low carbon ones, investing in high carbon sectors, say as an institutional investor looking to generate good returns over a 20-to-30-year period to successfully cover future pension liabilities, could result in stranded assets and poor returns," the letter states. "Counter-intuitively, institutional investors, as well as banks, companies, mutual funds and retail investors, continue to risk exactly that by deploying significant amounts of capital into high carbon sectors, or in companies with significant exposure to them."

It argues that with many investors unaware of these potentially systemic risks, the onus is on King and his fellow regulators to address these risks and better protect investors.

The letter was released on the same day as a second report from the Carbon Tracker Initiative, detailing how mining and energy firms listed on the London Stock Exchange alone hold coal reserves equivalent to 44.56 GtCO2.

"There are significant long-term financial and environmental risks associated with high carbon investments, and policymakers and regulators need a thorough appreciation of these," said David Nussbaum, chief executive of WWF-UK. "It's clear that we cannot burn all the fossil fuels currently listed as assets on the world's financial markets without seriously impacting the value of other listed assets – which would affect the future pensions on which we'll all depend."