Two separate developments on 2 December demonstrate progress for the movement for recognition that stranded fossil fuel assets can pose a major threat to investors.
In the UK, the Bank of England’s Governor Carney committed the Bank to monitor the financial risk of unburnable carbon. In the words of a press statement by Carbon Tracker, ‘The Bank of England has set a new standard for all central banks and financial regulators on climate risks by agreeing to examine, for the first time, the vulnerability that fossil fuel assets could pose to the stability of the financial system in a carbon constrained world. Carbon Tracker welcomes the Bank of England’s announcement as one vital step towards the levels of risk monitoring of fossil fuel assets required to manage the oncoming energy transition in an orderly manner. … This is the first major acknowledgement from a financial regulator that most of the world’s listed coal, oil and gas reserves could become “stranded assets” and have significant financial consequences. Will other national financial regulators follow suit?’
Carbon Tracker believes the Bank of England’s enquiry should not remain an isolated case, but invite other international financial regulators – particularly from global financial and fossil fuel centres such as the US, Canada, EU and China – to follow suit and conduct similar enquiries into the risks associated with unburnable carbon and stranded assets.
Also on 2 December, Norway’s $870 billion wealth fund announced the findings of a government commission review of its coal, oil and gas investments. The press release can be found here, but the headline conclusion of this enquiry was that the fund should strengthen its active ownership to identify those worst climate offenders on a case by case basis.