New tool tracks companies with most carbon risk

Author:
Ilario D'Amato
Reading time: 3 minutes
20 May 2015

LONDON: A new tool for investors highlights which companies are at most risk because of their dependence on carbon assets, an issue which was again in the spotlight at a climate finance event yesterday at Climate Week Paris, which is convened by The Climate Group.

Last January, an influential article in the scientific journal Nature urged to ‘keep in the ground’ 82% of the world’s coal, 49% of gas and 33% of oil to avoid a global warming increase of 2 degrees Celsius – the limit to avoid the most catastrophic effects of climate change.

Now, the just-launched Environmental-Tracking Index aims to help investors understand, manage and reduce their carbon risk, ranking 800 world’s largest companies through their emissions and carbon dependence data.

“There is a real risk that at least two thirds of the world’s fossil fuel reserves won’t be monetised,” says Sam GillCEO of ET Index. “This will lead to many high carbon-intensive operations and assets becoming stranded.

“Our rankings highlight which companies have the most direct and indirect CO2 emissions and are therefore most at risk of having stranded carbon assets, as a result of regulation, market forces and socio-political pressures.” 

The group has also released a report indicating the carbon efficiency of the top global companies. However, only 28% of the companies in the ranking report public, complete and independently verified data – with half of them disclosing partial or no data at all.

The report indicates 90% of Australia’s companies analyzed have disclosed complete data, with 75% of them also verified. As for the sectors, 63% of transportation companies report complete data – 31% externally verified. Financial sector comes last with only 39% of companies publicly reporting complete data.

While investors gathered at a separate event at Climate Week Paris yesterday said the financial risk of stranded carbon assets can not be ignored, they agreed renewables offer a compelling alternative to fossil fuels, both economically and environmentally.

Among senior investors and analysts from around the world, Mark Lewis, Senior Analyst for Energy and Climate, Kepler-Cheuvreux told the audience: "Look at what happened to the cost of solar generation in just the last five years. We’ve come from US$400 per MWh in only 2010 at global benchmark price, and today we’re at about US$130.” He added: “The rules of the game have completely changed because the cost of renewables is coming down much more quickly than the incumbent industry can cope with.”

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By Ilario D'Amato


Climate Week Paris, which is convened by The Climate Group, takes place from May 18-24, 2015. See the full calendar of events including further Twitter Q&As, by visiting ClimateWeekParis.org

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