Investors are increasingly aware of climate-related risks associated with extracting carbon from underground reserves, and can see that fossil fuel companies are responsible for a major source of emissions, write Dr Quintin Rayer and Dr Pete Walton. Thus far, though, responses have primarily been limited to shareholder engagement or divestment...
The fossil fuel companies are aware of the financial impacts society's actions have on them, with pressures to halt carbon-based fuel extraction, and associated investment risks intensifying. Future policy and technology changes could cause extraction firms to lose an estimated $34 trillion of revenue. Combined with changing investment policies, they may be unable to realise the value of fossil reserves, making current market valuations misjudged. Some argue that fossil fuel assets are increasingly uncompetitive, and their market share dropped from 29% of the S&P in 1980 to 5.3% by 2019....
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