The world’s 48 leading fossil fuel companies will be asked to run a ‘climate stress test’ at a summit hosted at the United Nations in New York today.
The New York ‘climate risk’ meeting will call on oil majors to evaluate the size of carbon reserves that are incompatible with a warming world.
Fund managers and investors attending the meeting want oil and gas majors to assess how compatible their assets are with global efforts to avoid dangerous levels of global warming.
Environmental news website RTCC reports low carbon business group CERES, which runs a network of investors worth $12 trillion, is organising the event.
Its chief Mindy Lubber told RTCC the financial risks associated with a carbon ‘bubble’ of fossil fuel reserves that cannot be burnt was starting to concern experts.
This had prompted the move to call for more transparency from the fossil fuel industry.
“One of the most important words and drivers of action on Wall Street is risk.
“That’s what they do. It’s one of the most important words in how insurance companies operate, and they’re the bedrock of our economy. It’s about risk,” she said.
The carbon bubble idea was launched in April last year by the environmental group Carbon Tracker to highlight the $674 billion of investments in oil, gas and coal that must stay in the ground if the world is to avoid dangerous levels of warming.
With countries set to sign a UN global greenhouse gas emission reduction deal next year, Ms Lubber believes the stress test they are calling for will demonstrate why oil majors need to diversify.
“We’re hoping that not only shows the risk but moves their new and future investments into something less fossil fuel orientated,” she said.
“Right now there is half a trillion dollars a year being spent to come up with new fossil fuels, digging, mining, that may very well be stranded on top of the already stranded assets.”
RTCC reports CERES has organised a low carbon investor’s conference at the UN’s HQ for the past six years.
However, this meeting has added significance given the political importance of 2014 to the climate negotiations.
In March national delegations are set to start the final set of negotiations on an international climate agreement.
UN Secretary General Ban Ki-moon says he wants to see evidence of progress at a high-level leaders meeting he is hosting in September, ahead of the year’s main UN climate meeting in Lima this December.
Today CERES will launch their latest Clean Trillion Report, based on data from the International Energy Agency, which says $36 trillion needs to be found by 2050 for low carbon infrastructure projects.
Ms Lubber said: “We’re not making the case that banks or asset managers should be doing this because it’s morally right. It has to be a financial issue.”
She added: “We need to move the climate debate from a tree hugger issue to an on-balance sheet financial risk, and we need to act based on the economic risks and opportunities.”
