Fossil fuels currently provide nearly 80 percent of the world’s energy, but as efforts to reduce climate change and find renewable alternatives continue, these traditional fuel companies may find their profits declining.
New York State Comptroller Thomas DiNapoli said investors must take environmental risks into consideration when making investments in energy. Fossil fuel exploration requires this investment. Without it and with additional pollution-control requirements, there’s a chance that production will be limited and therefore reduce profitability.
Jack Ehnes, head of California’s State Teachers’ Retirement System, said the “underlying question” is whether the billions of dollars being invested is worth the investment when the potential for lost profits is increasing. However, rather than ‘punish’ the fossil fuel companies for the changes in energy investment, he intends to work with them to create long-term options that benefit shareholders, firms, and the environment. Director of Corporate Ratings for Standard & Poor’s, Carin Dehne Kiley, said it will be difficult for companies to estimate these long-term risks since the timing and intensity of regulations are as variable as the pace of climate change.
Source: US, world pension funds say coal, oil and gas firms must consider risks from climate change, Washington Post
Related: Financial Pressure Grows on Fossil Fuel Industry, Climate Central