Today the global campaign against fossil fuels entered the financial mainstream as the world’s largest fund manager BlackRock teamed up with London’s FTSE Group to help investors avoid risky coal, oil and gas companies.
The new set of standards, created by FTSE, will exclude companies that extract or explore for fossil fuels.
This is believed to be the first time a leading index group has opted to specifically bar such companies.
Kevin Bourne, a FTSE managing director said the move was in response to the growing debate around the concept of the ‘Carbon Bubble’ – “one of the fastest-moving debates I think I’ve seen in my 30 years in markets.”
James Leaton, Head of Research at the Carbon Tracker said:
It is great to see a range of approaches being developed to address the potential for stranded assets including broker research, engagement, indices, and disclosure requirements – this shows we have put the issue on the agenda of investors to create this demand.
Some of the best known names on the London Stock Exchange will be targeted, including BP and BHP Billiton, as well as tech giants like Apple, Google and Microsoft, pharmaceutical companies such as Johnson & Johnson and some large US banks.
This is the latest in a series of announcements proving that mainstream financial institutions are serious about the idea that the more than $670 billion that is invested annually in fossil fuel assets would essentially become ‘unburnable’ if governments act to curb climate change.
Peter Lehner, NRDC executive director said:
So far it’s been relatively niche players that have divested and that is why this launch is game-changing. What this aims to do is bring the opportunity for fossil fuel-free investing mainstream.
In Australia companies have already pulled out of fossil fuel projects because of fear about overly high levels of investment risk as the world starts to turns its back on coal.
The FTSE indices have been welcomed by climate activists calling for institutions around the world, including colleges, local governments, banks and pension funds, to divest from fossil fuel holdings.
They argue that dirty energy investment is not only dangerous for the environment but an increasingly risky financial bet.