“Axa warns that companies linked to fossil fuels risk their reputations Climate risk is becoming ‘synonymous with reputation risk’ as a growing fossil fuel divestment movement gains traction with investors around the world, says major European investor Axa Axa say that ‘climate risk should not be neglected in the investment decisions that investors are making today’. The reputations of companies linked to fossil fuels are at immediate risk from a fast-growing divestment campaign, one of Europe’s biggest asset managers has warned. Only a quarter of existing, exploitable fossil fuel reserves are burnable if global warming is not to exceed dangerous levels, according to recent analyses. Campaigners have called for divestment on moral grounds but, if governments fulfil their pledges to curb climate change, trillions of dollars of coal, oil and gas held by investors would become worthless. “[That] climate risk is becoming synonymous with reputation risk,” said Luisa Florez, senior responsible investment analyst at Axa Investment Managers, which manages over €600bn (£459bn) of assets. “Undoubtedly, there are a number of factors behind the recent decline in oil prices, such as shale gas development. Nevertheless, moral issues are also playing a growing role, with the divestment movement steadily gaining traction amongst investors across the globe.” The rapid expansion of renewable energy combined with weakening electricity demand are driving a “structural decline” in coal markets, particularly coal exported to power stations, according to the Institute for Energy Economics and Financial Analysis (IEEFA), a US research group. The IEEFA report concluded India cannot afford to continue importing coal, with its finance minister considering ending imports entirely within two to three years.China’s demand for coal will peak permanently by 2016, with imports falling by 11% in 2014; US coal exports fell 20% in 2014, the group said. “Coal companies’ underperformance against the global equity market is unprecedented,” said the IEEFA’s Tim Buckley. “A more than 50% decline in coal prices has seen most listed coal companies globally lose 80-90% of their equity market value in the last four years. While the sun will undoubtedly rise for renewable energy in 2015, for coal, there remains a lot further to fall.” theguardian/environment/2015/jan/15/axa-warns-companies-linked-fossil-fuel-risk-reputations
Posted on: Mon, 19 Jan 2015 11:23:53 +0000
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