Risk Exposure in a Changing Climate: The Story of PG&E

The destructive California wildfires in November 2018 once again focused investor attention on climate-change related risks. PG&E, the largest utility in the United States, has stated the fires were very likely caused by its equipment. The company has since announced it will file for bankruptcy protection at the end of January in what is being called the highest profile climate-change bankruptcy to date. The company’s expected liabilities from the devastating wildfires in 2017 and 2018 are estimated at over USD 30 billion and the company’s share price has dropped by over 90% since before the 2017 fire. It is currently unclear what would happen in the event of PG&E filing for bankruptcy protection, but state legislators have mentioned the possibility of breaking up the utility, selling off assets, or converting it to a publicly-owned company.

COP24 in Katowice up close

This blog originally appeared on GES International’s website and has been republished following Sustainaltyics’ acquisition of the company on 9 January 2019. See the press release for more information.

IPCC Releases Special Report on Global Warming of 1.5ºC

This blog originally appeared on GES International’s website and has been republished following Sustainaltyics’ acquisition of the company on 9 January 2019. See the press release for more information.

Hope from San Francisco

This blog originally appeared on GES International’s website and has been republished following Sustainaltyics’ acquisition of the company on 9 January 2019. See the press release for more information.

Coal pipes

Energy and Climate Policy in Australia: Out of Touch and Out of Time?

Just before the leadership spill two weeks ago, Australia’s former prime minister Malcolm Turnbull discarded the carbon emissions reduction target contained in the National Energy Guarantee (NEG). The proposed legislation was aimed at reforming the country’s electricity market and addressing the “energy trilemma” of ensuring emissions reduction, grid reliability and power price affordability.

Beyond footprinting: How can investors manage carbon risks in their portfolio?

Institutional investors are facing increased pressure from customers, regulators and civil society to become more responsive to the threat of climate change. Over the last few years, there have been several developments that encourage investors to integrate risks associated with climate change into their decision-making (see timeline below). In addition to the impact of their investment, they need to address the effect climate change will have on their investment. This will manifest in both physical risk – through floods, draughts, extreme weather events, etc. – and carbon risk (also referred to as transition risk).

Transition Risk for Oil & Gas Companies: Addressing the Disclosure Gap

As the world transitions towards a low-carbon economy, investors are increasingly interested in how oil and gas companies plan to address related risks. Most companies in the industry recognize that their business is exposed to risks related to carbon regulations, decreasing demand for its products, or increasing costs related to the implementation of emission reduction technologies. However, when it comes to addressing these risks, disclosure is limited (as we noted in our July 2017 blog post on the Task Force for Climate-Related Financial Disclosures [TCFD]). Oil and gas companies will have to increase and improve their disclosure if they want to convince investors of the viability of their business model in a carbon-constrained world.

What will the TCFD mean for Oil and Gas Producers?

Building on the momentum created by the “Aiming for A” resolutions and the Paris Agreement, the Task Force on Climate-related Financial Disclosures (TCFD) published its recommendations for disclosing climate-related risks in June. How will these new guidelines affect the oil and gas industry and can investors leverage them in their engagement efforts?

Sizing up the US withdrawal from the Paris Agreement

President Trump’s announcement last week that he will pull the US out of the Paris Agreement is unlikely to have any meaningful impact on clean energy transition. This is because the global pivot to renewable energy is increasingly being driven by economic fundamentals, not policy (an argument we made in our deep dive of the Paris Agreement in January 2016).