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Investors demand fossil fuel giants assess climate risks

James Murray, Business Green
A group of 70 investors controlling more than $3trn in assets yesterday opened a new front in the battle to get fossil fuel companies to fully assess the climate risks they face, revealing that they have written to 45 fossil fuel and energy companies requesting detailed information on the "financial risks that climate change poses to their business plans".

Dubbed the Carbon Asset Risk (CAR) initiative and orchestrated by the Ceres group of responsible investors and the Carbon Tracker Initiative, the letters are backed by some of the world's institutional investors and pension funds, including the New York State and New York City Comptrollers, F&C Asset Management and the Scottish Widows Investment Partnership...
(25 October 2013)


Investors warn moves to curb climate change will hit fuel demand

Ed Crooks, Financial Times
...Craig Mackenzie, head of sustainability at Scottish Widows Investment Partnership, said there had been an assumption among investors that a potential decline in demand for fossil fuels was a long-term issue, but he saw a possibility that it could come much sooner...
(24 October 2013)


Investors ask fossil fuel companies to assess how business plans fare in low-carbon future

Press Release, CERES
A group of 70 global investors managing more than $3 trillion of collective assets today launched the first-ever coordinated effort to spur 45 of the world’s top oil and gas, coal and electric power companies to assess the financial risks that climate change poses to their business plans.

Recent studies by the Intergovernmental Panel on Climate Change and the International Energy Agency have suggested that, in order to achieve the international goal of limiting global warming to 2˚C, the world will need to live within a set carbon budget, and a significant portion of proven global fossil fuel reserves will need to be left in the ground.

The world is currently, however, on a path toward global warming of 4˚C or more, which the World Bank warned must be avoided in order to prevent catastrophic climate change impacts.

The investors, most of them based in the United States and Europe, sent letters to the fossil fuel companies last month, requesting detailed responses before their annual shareholder meetings in early 2014. Investors signing the letters include California’s two largest public pension funds, the New York State and New York City Comptrollers, F&C Asset Management and the Scottish Widows Investment Partnership.

The investor effort, called the Carbon Asset Risk (CAR) initiative, is being coordinated by Ceres and the Carbon Tracker initiative, with support from the Global Investor Coalition on Climate Change...


(24 October 2013)


Stranded assets and the fossil fuel divestment campaign: what does divestment mean for the valuation of fossil fuel assets?

Ansar A, Caldecott B, Tilbury J, Smith School of Enterprise and the Environment, University of Oxford
From the Executive Summary
‘Stranded assets’, where assets suffer from unanticipated or premature write-offs, downward revaluations or are converted to liabilities, can be caused by a range of environment-related risks. This report investigates the fossil fuel divestment campaign, an extant social phenomenon that could be one such risk. We test whether the divestment campaign could affect fossil fuel assets and if so, how, to what extent, and over which time horizons.

Divestment is a socially motivated activity of private wealth owners, either individuals or groups, such as university endowments, public pension funds, or their appointed asset managers.1 Owners can decide to withhold their capital—for example, by selling stock market-listed shares, private equities or debt—firms seen to be engaged in a reprehensible activity. Tobacco, munitions, corporations in apartheid South Africa, provision of adult services, and gaming have all been subject to divestment campaigns in the 20th century.Building on recent empirical efforts, we complete two tasks in this report. First, we articulate a theoretical framework that can evaluate and predict, albeit imperfectly, the direct and indirect impacts of a divestment campaign.

Second, we explore the case of the recently launched fossil fuel divestment campaign. We have documented the fossil fuel divestment movement and its evolution, and traced the direct and indirect impacts it might generate. In order to forecast the potential impact of the fossil fuel campaign, we have investigated previous divestment campaigns such as tobacco and South African apartheid.

Download the report
(2013)

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