Energy and climate change secretary Ed Davey has commented that there is a case for making companies disclose their investments in fossil fuels and explain associated the risks. The remarks come as the fossil fuel divestment campaign continues to gather pace.
Davey’s comments were made at the UN conference currently taking place in Lima, Peru, which aims to produce a draft international climate change agreement. Tackling climate change means there are risks in the industry and the minister argues that investors need to know how this will affect the long-term value of their fossil fuel holdings.
According to the Guardian, Davey commented, “We are seeing a move from carbon capitalism to climate capitalism. We know with climate change we have got to move to a low-carbon agenda and we are already seeing the signs that the market is going to help drive this.”
The so-called ‘carbon bubble’ means that as countries introduce climate change policies and encourage the uptake of renewables, the world will become less dependent on fossil fuels. The majority of known fossil fuel reserves must stay in the ground in order to avoid catastrophic climate change and some argue this means companies in the industry are overvalued. As a result, the energy minister agues that there’s a “case for making it mandatory” to inform investors of the risks around fossil fuels investment.
“There must be a case for ensuring that investors, be they pensioners or be they global investors, understand exactly what they’re investing in,” Davey added to the Financial Times.
“I think we need to look at rules on information, rules on disclosure, because it’s all about transparency for investors.”
The fossil fuel divestment campaign, which urges investors to move their money out of the industry and instead put it in cleaner, alternative energy sources, has been gathering pace, with religious groups, educational institutions and pension funds committing to divest.
Photo: Wisconsin Department of Natural Resources