Cli limate-Related Dis isclo losure A Carbon Tracker Initiative - PowerPoint PPT Presentation

Cli limate-Related Dis isclo losure A Carbon Tracker Initiative presentation to the Task Force on Climate-related Financial Disclosure Mar ark Cam ampanale Founder & Executive Director Mik ike Kni night Head of Regulatory Research and Reform 9 th February, 2016

An In Intr troduction: The Carbon Tracker Initiative Carbon Tracker is a non profit financial think tank. Identity To enable a climate secure global energy market by aligning Mission the capital markets with climate reality. To provide the financial and regulatory analysis to ensure Strategy that the risk premium associated with fossil fuels is correctly priced. Mapping the transition for the fossil fuel industry to stay How within a two degree budget.

Our Recommendation: Priorities for focus 1.The Carbon Budget 2.Fossil Fuel Risk Exposure 3.Low-Carbon Transition A.Business Risk & Strategy B.Accounting

The Carbon Budget  Problem: : The math  900 GtCO 2 – 2 ˚ C Carbon Budget for 2013- 1 2049  2860 GtCO 2 – Total estimated fossil fuel reserves and resources  Dis isclosure: Embedded CO 2  Why: : Enables monitoring mechanism of markets’ carbon intensity  Status: : Lack of forward-looking methods & incorporation of price banding 1 Carbon Tracker Initative, 'Unburnable Carbon 2013: Wasted capital and stranded assets', 2013

Fossil Fuel Risk Exposure  Problem: : Inadequate clarity of fossil fuel risk exposure  Dis isclosure/Standard: Capital requirements & credit ratings adequately reflect climate risk  Why: Clear risk attribution will divert capital to “high quality assets”  Status: : Research required to understand financial exposure to fossil fuel BAU

Lo Low-Carbon Transition: Business Risk & Strategy  Problem: : Business strategies inadequately recognise risk reinforced by Paris Agreement  Dis isclosure: Discussion of how business aligns with 2 ˚  Why: Actions rather than words  Status: : Companies dismiss risk as ‘unlikely’ or ‘immaterial’. Do boards believe certain demand projections?

Lo Low-Carbon Transition: Accounting  Problem: : Insufficient accounting of low-carbon transition  In Input to Standard(s): ): Enable asset accounting to acknowledge 2 ˚ scenario as default position  Why: Capital driven away from surplus carbon assets  Status: : Existing standards fail to deliver. Financial reporting does not reflect energy transition.

Our Recommendation: Approach  Fossil fuel companies should acknowledge 2 ˚ scenario as international default position  TCFD can enable financial reports to align the numbers with the rhetoric

Thank You Mar ark Cam ampanale Founder & Executive Director Mik ike Kni night Head of Regulatory Research and Reform www.carbontracker.org @Carbon Bubble 25 th November 2015