'Behind The Curve' - Climate Risk

A handful of listed businesses are showing all the signs of being well ‘behind the curve’ when it comes to their response
to investor and stakeholder concerns on issues surrounding sustainability and climate change.

In the last year global oil, gas and coal companies have expanded their reported reserves, even though 80% of existing reserves cannot be used in order to avert the most damaging effects of climate change, according to the Intergovernmental Panel on Climate Change (IPCC).

The top five ranked oil and gas companies – Gazprom , Rosneft , PetroChina , ExxonMobil and Lukoil – account for over 50% of overall oil and gas list emissions and much of the emissions growth.

Today, ahead of  #GlobalDivestmentDay, The Carbon Underground 2015: The World’s Top 200 Public Companies Ranked by the Carbon Content of Their Fossil FOSL -0.31% Fuel Reserves, a report by Fossil Free Indexes (FFI), finds that the potential carbon dioxide (CO2) emissions from the reported reserves of the top 200 public oil, coal and gas companies have increased to 555 gigatons (Gt) from 546 Gt last year and 504 Gt in 2010.

This amount is almost five times more than can be burned through the year 2050 for the world to have an 80% chance of limiting global temperature rise to two degrees celsius -the amount likely to prevent the most dangerous impacts of climate change, according to the report.

“The report’s primary finding, that reserves-based emissions of the Carbon Underground 200 continue to grow as the carbon budget gets smaller – shows the stakes are rising” says Stuart Braman, FFI founder and CEO. Its fossil free US large-cap index FFIUS – which is based on the S&P 500, outperformed it by 1.5% in 2014. While he doesn’t claim potential outperformance every year, the results “illustrate both the value of a carbon-aware investment strategy and the potential cost of ignoring the risk of stranded assets”, he says.

Ben van Buerden, CEO of Royal Dutch Shell , is making a speech in London tonight at International Petroleum Week. According to the Financial Times, he is expected to say that the industry must make the case that the world’s energy needs will underpin the use of fossil fuels for decades to come, so instead of ruling them out there should be a focus on lowering carbon emissions.