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Climate, energy and net-zero

The rise of the carbon-sensitive shareholder

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  • The Carbon Tracker Initiative made a minor splash in the UK earlier this year by arguing that a large part of the value of the FTSE 500 was built on carbon reserves that the climate change agenda would ultimately render ‘unburnable.’
  • Although many of the Initiative’s assumptions are debatable, the idea that the valuations of carbon assets and the companies that sell or use them on a large scale are contingent on political and regulatory change over the next two decades is clearly not.
  • The main source of this regulatory change is not the top down Kyoto process, but a bottom up regulatory activism in both the emerging and developed worlds. This in turn is driven by changing social attitudes.   
  • The Carbon Tracker Initiative is itself a sign of a new form of investor activism driven by ‘normative’ environmental concerns. We label the driver of this activism ‘the carbon-sensitive shareholder;’ and we conclude that she is going to have to be taken increasingly seriously.

The views expressed in this report can be attributed to the named author(s) only.