According to reports circulating throughout the media, the G20 forum has launched a joint probe into the possible global financial risks presented by fossil fuel companies investing in future developments that run contrary to international climate goals.
A report in The Telegraph this week highlights the International Energy Agency’s view that “two thirds of all assets booked by coal, oil, and gas companies may be worthless under the ‘two degree’ climate deal” currently seen as optimal by experts and politicians. Specifically, leaders from within the G20 nations are concerned that the approximately $6 trillion worth of investment into oil, gas, and coal since 2007 “is based on false assumptions” and may end up creating a glut of “stranded assets.”
Subsequently, The Telegraph believes that the G20 has asked the Financial Stability Board in Basel — an international body designed to monitor and make recommendations about the global financial system — to begin a public inquiry into the possible fall-out faced by the global financial system if the proposed climate rules are put into place, and become ever more strict.
The investigation into the possible stranded assets is being pushed by France, according to “diplomatic sources” speaking to The Telegraph.
France’s concerns are not without merit, however, if a recent report from HSBC is any indicator. Britain’s multinational banking and financial services company, HSBC Research recently published a report highlighting the danger caused by possible stranded assets to investors.
But HSBC’s concerns will pale in significance if the Financial Stability Board concludes that the $6 trillion worth of new investments into the fossil fuel industry may end up as stranded assets.