Assessing Carbon Risk: Low Carbon Investment Strategies on the rise?

Tuesday, 21 April 2015

Tagged under: climate change nordic2015 fossil fuel

Institutional investors have come to realise how important it is to understand exposure to carbon stranded assets. Fueled by an increased demand for solar and wind energy, clean energy investment last year beat expectations, rising 16 percent to $310 billion worldwide, according to Bloomberg New Energy Finance (BNEF).

The dash to reduce investors’ exposure is gaining momentum. Whether catalysed by a concern over mispriced fossil fuel assets or pressure for divestment, investors are beginning to use a critical eye to assess the carbon-related risks in their portfolios (MSCI 2015 ESG Trends to Watch)

Just one day after BP adopted a shareholder resolution to support better carbon asset risk disclosures following disappointing global oil demand and low oil prices, 62 institutional investors representing nearly $2 trillion in assets called on the Securities and Exchange Commission to push for better disclosure by oil and gas companies of critical climate change-related business risks that will “profoundly affect the economics of the industry.” (Investors Push SEC to Require Stronger Climate Risk Disclosure by Fossil Fuel Companies)

“We have found an absence of disclosure in SEC filings regarding these material risks, which constitute ‘known trends’ under SEC rules,” the investors wrote to SEC Chair Mary Jo White. “The risk of reduced demand for oil, uneconomic projects and stranded assets… is material to the companies and their investors, as it directly affects the profitability and valuation of the companies” cited 3BL Media (Investors Push SEC to Require Stronger Climate Risk Disclosure by Fossil Fuel Companies)

TBLI CONFERENCE™ NORDIC 2015 will cover strategies for how to approach low carbon investments in the Roundtable 1 discussion: "Assessing Carbon Risk: Low Carbon Investment Strategies on the rise?". Join us in Copenhagen on June 15 - 16.

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