Will climate change leave your investment portfolio stranded like a polar bear on melting ice floe? If your pension fund or 401(k) manager invests in fossil-fuel companies, it just might.
Last year the International Energy Agency warned that a third of the world’s oil, coal and other fossil fuel reserves must remain untouched until 2050 to stave off catastrophic climate change. That, naturally, freaked out some investors. What’s the future worth of an ExxonMobil or a Chevron if governments ever get their act together and impose carbon taxes that make burning that dinosaur juice unprofitable? That would transform those fossil fuel reserves into “stranded assets,” turning the billions of dollars spent discovering and securing that untapped oil, natural gas, and coal into liabilities.
Such a scenario would make sources of renewable energy, such as wind and solar, even more competitive, further depressing fossil fuel behemoths’ stock price—and the value of your portfolio. Then there’s a growing and increasingly successful campaigns to persuade pension funds, universities and municipalities to divest from fossil fuel companies to fight climate change. According to an analysis by the Climate Accountability Institute, a non-profit institute, just 90 fossil fuel companies have been responsible for 63 percent of the world’s cumulative greenhouse gas emissions since 1854. ExxonMobil alone has spewed 3.3 percent of that carbon.