Looking for more information? Here’s everything you should need.
In 2011, Carbon Tracker asked whether the world’s capital markets were carrying a “carbon bubble”.
Further analysis has identified the fossil fuel reserves and resources at risk of becoming economically “stranded assets” due to a low-carbon energy transition.
Mark Carney, Governor of the Bank of England, has recognized these risks and suggested that they may threaten financial stability. Mr. Carney has observed that markets suffer from a “tragedy of the horizons,” and that better disclosure could “act as a time machine,” illuminating risks that “may otherwise lurk in the darkness for years to come.”
With this in mind, Carbon Tracker identifies the strategic and business model risk information needed to fill that void.
- Information should disclose any divergence between the company’s commodity market planning assumptions and demand levels implied by climate and energy policy targets.
- Information should reflect how the board oversees climate risk management.
- Information should discuss how management would incorporate climate policy targets into investment decisions.
- Forward-looking projections should evaluate potential project portfolios. Quantitative disclosure should align with data used by the company for investment decision-making and risk management.
- Explanations should capture company vulnerability to price risk through stress-tests or sensitivity analysis.
- Information should clarify assumptions underpinning financial reporting and impairment analysis.
- Explanation should be give in the absence of answers to the above.