INVESTORS TELL EUROPEAN FIRMS TO REVEAL MISSING ‘CLIMATE COSTS’

Investors are pushing major European companies to make sure the “missing” costs of climate change are properly reflected in their financial statements, a move that could wipe billions of dollars off the value of sectors from energy to aviation, Matthew Green and Simon Jessop reported for Reuters.

The European and US investors, who manage $9 trillion in assets, have sent 36 carbon-heavy companies a document here setting out how they should account for the likely impact of the 2015 Paris climate accord on their future profits. The investors suspect that existing balance sheets rest on assumptions over variables such as oil prices, carbon taxes, and the lifespan of fossil fuel assets that are incompatible with a shift to net-zero carbon emissions under the Paris deal.

JPM Morgan Asset Management (part of JP Morgan Chase & Co.), DWS, Fidelity International and M&G Investments were among 38 asset managers to back the document, according to a copy of an accompanying letter here shared with Reuters by the Institutional Investors Group on Climate Change, an industry coalition. In a statement published, the investors called on the companies to “address missing climate change costs in financial accounts.”

“Either we get serious and start shifting capital flows towards activities aligned with the Paris Agreement, or we continue to talk about it,” said Natasha Landell-Mills, head of stewardship at London-based asset manager Sarasin & Partners, who wrote the 23-page investor expectations document. “Paris-aligned accounts are among the most important changes that will drive system-wide capital redeployment,” Landell-Mills said. Among the companies the investors wrote to were Germany's E.ON and Uniper, Spain's Iberdrola and Endesa, France's Air Liquide, Austria's OMV and London-listed Anglo American.