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09

Investors blast oil companies for undermining climate goals

Open-access content Wednesday 18th September 2019 — updated 5.50pm, Wednesday 29th April 2020

None of the world’s top oil and gas companies are aligned with the Paris Agreement’s ambition to limit global warming to 2°C above pre-industrial levels.

2

That is according to a new report from the $15trn (£12trn) investor-backed Transition Pathway Initiative (TPI), which accused fossil fuel firms of "dragging their feet" over climate change.

After assessing the carbon performance of 50 oil and gas companies, the TPI also found that just two are aligned with climate targets of national governments - Royal Dutch Shell and Repsol.

This is in stark contrast to the electric sector, with 29 of the 59 electricity firms studied now conforming to the Paris Agreement. EDF and Ørsted are among those set to be nearly 'zero carbon' by 2030.

The study also involved assessment of corporate governance, finding that coal is the worst performing sector, with 14 companies failing to recognise climate change as a relevant risk.

Helena Viñes Fiestas, global head of stewardship and policy at BNP Paribas Asset Management, which helps fund TPI's research, bemoaned a lack of CO2 emission reduction targets.

"We, as a major institutional investor, are concerned that transition risk - the large and growing gap between government targets and company ambitions - is a major source of investment risk," she said.

"Despite an increasing number of governments having raised their emission reduction ambitions, the majority of companies have yet to establish their 2030 emission reduction targets, let alone set a longer-term vision for their carbon emissions."

Of all the energy firms studied, 22% fall into the bottom ranking for climate risk governance, of which 14 are in the coal sector, six in oil and gas, and nine electric utilities.

The findings come after the Institute and Faculty of Actuaries published a report earlier this year providing guidance on how actuaries should respond to climate change.

It suggests adding climate change risks to risk registers, risk matrices and other risk management systems in place, and continuing to monitor, mitigate and update these.

Actuaries are also urged to help clients and stakeholders quantify qualitative climate change risks to improve understanding, using tools such as scenario analysis.

"Climate change is an actuarial problem and an issue that should be proactively raised with clients and stakeholders," the report states.

"The same actuarial risk management approach applies to climate change risks as with the other actuarial risks that we are involved in."

 

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This article appeared in our September 2019 issue of The Actuary .
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Thursday 19th September 2019
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Most financial firms unprepared for LIBOR transition

Less than half of financial services firms are confident about transitioning away from the London Interbank Offered Rate (LIBOR) by the end of 2021, a global survey has uncovered.
Tuesday 17th September 2019
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European insurers call for further IFRS 17 changes

Europe’s largest insurance companies have urged the International Accounting Standards Board (IASB) to publish further amendments to IFRS 17.
Monday 16th September 2019
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IFoA launches Actuarial Monitoring Scheme

The Institute and Faculty of Actuaries (IFoA) has launched its Actuarial Monitoring Scheme (AMS) with the announcement of two thematic reviews.
Tuesday 24th September 2019
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Half of DC pensions to add ESG focus to default fund

Half of defined contribution (DC) pension schemes in the UK plan to include or continue an environment, social and governance (ESG) focus in their default investment strategy.
Thursday 12th September 2019
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Workplace inclusion now a 'commercial imperative' for insurers

Insurance companies across the world now view diversity and inclusion (D&I) as commercial concerns, rather than just internal issues, new research has uncovered.
Tuesday 24th September 2019
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