Investors are increasingly asking fossil fuel companies about how their strategy reflects climate risk. Often, such stress-tests use the International Energy Agency’s 450 Scenario (450S) or its replacement the Sustainable Development Scenario (SDS).
However, as we show in this briefing, these scenarios fall short of the Paris goals. Such scenarios may give a false sense of confidence of portfolios’ robustness, or that the Paris goals can be met with limited change in investment practice. Investors testing their portfolios against the SDS would be potentially undervaluing climate transition risk.
We recommend how investors might engage with the IEA to ensure more robust scenarios and suggest actions investors can take in the meantime to better assess climate risk.
About our investor briefings
Meeting the objectives of the Paris agreement means that fossil fuel companies will come under increasing pressure from investors concerned about the risks of failing to make the transition to a zero carbon energy future.
Greenpeace has worked to challenge the industry’s business model for over a decade. Our work allows investors to question many of the underlying assumptions of oil industry scenarios and forecasts.
We also examine and interrogate macroeconomic risks as well as technical, legal and regulatory challenges in systemically significant oil projects.
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