9 May 2012
- 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.
Practice Lead, Energy
The views expressed in this note can be attributed to the named author(s) only.