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The Climate Group

The Climate Group is an independent, not-for-profit organization working to inspire and catalyze leadership for a Clean Revolution: a low carbon future that is smarter, better and more prosperous.

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LONDON: A group of 70 global investors that manage more than US$3 trillion worth of collective assets, today launched the first-ever joint effort to spur the world’s top power companies to assess the financial risks of climate change, and the opportunities of transitioning to the low carbon economy.


The investors sent letters to 45 of the world's biggest oil, gas, coal and electric power companies last month, in response to Carbon Tracker’s 2013 report Unburnable Carbon. The report found that in 2012 alone, the 200 biggest publicly traded fossil fuel companies collectively spent around US$675 billion on new reserves which could never be used and would become worthless, or ‘stranded assets’.


Coordinated by CERES, the initiative aims to highlight the opportunity in redirecting at-risk capital to low carbon energy and clean technologies, as the investors ask how power companies are preparing for financial climate risk and the fast-growing clean energy economy.


The 70 investors, which include California’s two largest public pension funds, the New York State Comptroller, F&C Management and the Scottish Widows Investment Partnership, asked for detailed responses ahead of their yearly shareholder meetings in 2014.


The investors wrote: “We would like to understand what options there are for [the company] to manage these risks by, for example, reducing the carbon intensity of its assets, divesting its most carbon intensive assets, diversifying its business by investing in lower carbon energy sources or returning capital to shareholders.”


“Companies must plan properly for the risk of falling demand by stress-testing new investments to minimize the risk our clients’ capital is wasted on non-performing projects”, said Craig Mackenzie, Head of Sustainability at Scottish Widows Investment Partnership.


“The world is taking climate change seriously and global pressures to reduce fossil fuel use will only grow stronger. As long-term investors, we see the world moving toward a low-carbon future in which fossil fuel reserves that companies continue to develop may actually become a liability, which could take a toll on shareholder value”, commented Jack Ehnes, CEO of the California State Teachers’ Retirement System.


Dr. Julie Gorte, Senior Vice President for Sustainable Investing at Pax World Management Corp, said: “There’s a real appetite among our clients to invest in companies that are innovating to address climate change. Tackling climate change is both a business risk and opportunity, so it is in the interest of energy companies and utilities to assess, disclose and develop strategies to mitigate carbon asset risk.”