Investors managing $3 bn demand oil companies’ climate-related business plans

Global warming to prompt major restructuring at fossil fuel companies, investor coalition says

A group of 73 investors that manage a combined total of $3 tn in assets are demanding the world’s largest coal, gas and oil companies inform shareholders of their plans to cope with a global need to lower greenhouse gas emissions.

The investors, including CalSTRS, CalPERS, Scottish Widows Investment Partnership and others, have written a joint letter to 45 of the world’s largest fossil fuel companies to warn them to prepare for a sharp drop in demand for their products.

The investors say governments will be forced to limit carbon emissions in order to keep global warming to a minimum of 2 degrees Celsius. This, the investors say, will force fossil fuel companies to leave some of their reserves in the ground, diversify revenue sources and halt exploration for more oil, gas and coal. They call on companies to outline their plans to cope before their 2014 shareholder meetings.

‘We would like to understand [the company’s] reserve exposure to the risks associated with current and probable future policies for reducing greenhouse gas emissions by 80 percent by 2050,’ the investors write. ‘We would also like to understand what options there are for [the company] to manage these risks by, for example, reducing the carbon intensity of its assets, divesting its most carbon-intensive assets, diversifying its business by investing in lower carbon energy sources, or returning capital to shareholders.’

The investors sent the letter to companies including GlencoreXstrata, Chevron, ExxonMobil, Royal Dutch Shell, Rio Tinto, BHP Billiton and others. Besides oil, gas and coal companies, the investors also wrote to utilities such as Duke Energy, China Power International Development, American Electric Power and AES Corporation.

Ceres, a coalition of investors and environmental groups, says the investors’ action marks the first-ever co-ordinated effort to oblige fossil fuel companies to disclose business plans to deal with possible international policies meant to slow climate change.

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