High-CO2 investments could be next sub-prime

14th February 2012


Related Topics

Related tags

  • Corporate governance

Author

IEMA

The UK's future economic stability is at risk from organisations investing in activities that are damaging the environment, the Bank of England has been warned.

In an open letter to Sir Mervyn King, the bank’s governor, a group of investors and academics has called for an investigation into the level of the UK’s exposure to high-carbon investments as the country transitions to a low-carbon economy.

The letter argues that as technological advancements and government policies drive a shift away from fossil fuels, pension funds and other long-term investors that continue to invest in companies working in high-carbon sectors, such as oil and gas abstraction, could find themselves saddled with uneconomical assets in 20 or 30 years.

“Counter-intuitively, investors continue to pour cash into unsustainable high-carbon assets without understanding or being able to manage the risks associated with these investments,” says James Cameron, of low-carbon investment firm Climate Change Capital. “This poses significant challenges for the future prosperity of Britain that can’t be ignored.”

Paul Simpson, CEO of the Carbon Disclosure Project, warned: “The current economic woes of Europe present a short-term headache; if we are to avoid a much larger hangover from our high-carbon economy, then regulators, stock exchanges and long-term investors must analyse the fossil fuel reserves on company balance sheets in order to better understand and reduce risk from high-carbon investment.”

Regulators do not monitor the number of high-carbon investments being made in the UK, and the letter urges the Bank of England to investigate the level of risk posed by this exposure. Following the letter, King indicated the bank’s financial policy committee may begin an investigation into the UK's exposure to high-carbon investments.

Subscribe

Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.


Transform articles

A social conscience

With a Taskforce on Inequality and Social-related Financial Disclosures in the pipeline, Beth Knight talks to Chris Seekings about increased recognition of social sustainability

6th June 2024

Read more

Disinformation about the impossibility of averting the climate crisis is part of an alarming turn in denialist tactics, writes David Burrows

6th June 2024

Read more

David Symons, FIEMA, director of sustainability at WSP, and IEMA’s Lesley Wilson, tell Chris Seekings why a growing number of organisations are turning to nature-based solutions to meet their climate goals

6th June 2024

Read more

A system-level review is needed to deliver a large-scale programme of retrofit for existing buildings. Failure to do so will risk missing net-zero targets, argues Amanda Williams

31st May 2024

Read more

Chris Seekings reports from a webinar helping sustainability professionals to use standards effectively

31st May 2024

Read more

Although many organisations focus on scope 1 and 2 emissions, it is vital to factor in scope 3 emissions and use their footprint to drive business change

31st May 2024

Read more

IEMA submits response to the Future Homes Standard consultation

31st May 2024

Read more

What is the role for nature in the Climate Change Act? Sophie Mairesse reports

20th May 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close