Jan 27, 2012 - 12:00am
There is concern over a growing ‘carbon bubble’. In 2011 Carbon Tracker released research that discusses the expected valuation impact on companies with fossil fuel reserves where there is a “carbon budget” in place.1 In order to prevent global temperatures from rising more than 2°C, now the basis of international negotiations, there is a finite amount of fossil fuels that can be burnt. This is the carbon budget. This carbon budget is a mere 20% of known fossil fuel reserves. If only 20% of known fossil fuel reserves have economic value, there will be a significant impact on the value of companies with large quantities of these reserves on their balance sheets.
Our submission to the Australian Securities Exchange (ASX), as part of their review of Reserves and Resources Disclosure Rules for Mining and Oil & Gas Companies, puts forward the case for greater and a more consistent level of disclosure by mining and oil & gas companies as to the climate related risks they face.
1Unburnable Carbon – Are the world’s financial markets carrying a carbon bubble?, Carbon Tracker, July 2011), http://www.carbontracker.org