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Communicating Climate Risks to Investors: the Next Major Ratings Failure

Alan Miller's picture

 Reserves of coal outside a power generation plant. - Photo: Shutterstock

Only a few years ago, the failure to properly quantify and communicate the risks of a widely traded commodity, mortgage-backed securities, caused major damage to the US and ultimately the global economy. According to the IMF, total losses will approach $4 trillion (pdf). A significant share of the losses were incurred by pension funds and insurance companies typically viewed as among the more risk-averse and cautious segments of the investment community.

A new report by the Carbon Tracker Initiative and the Grantham Research Institute on the Environment and Climate Change evaluates the failure to properly value the risks of climate policy to companies with major fossil fuel reserves and finds a similar potential for massive financial fall-out. They conclude that “Between 60-80% of coal, oil and gas reserves of publicly listed companies are ‘unburnable’ if the world is to have a chance of not exceeding global warming of 2°C.” (A short video explaining the research and mapping the amounts of investment at stake in different countries is available online).

Why we need a price on carbon: the movie

Rosina Bierbaum's picture

The perceived communications fiasco of the last few months about what is known and not known about the science of climate change led one of my students, Andy Lubershane, to try a different approach—animation.  His effort is meant to communicate in a clear, humorous, memorable way the reasons why we need to put a price on greenhouse gas emissions. 

Andy is one of 160 Master’s students using the World Development Report 2010 as a textbook on Environmental Assessment at the University of Michigan. 

 

 

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