“It’s like the old Road Runner TV show where the coyote keeps jumping off the cliff – but his legs keep running and running,” Carbon Tracker’s CEO Anthony Hobley said, of the oil sectors’ overly bullish demand projections.
Another trend gaining traction in Paris is 2-degree stress testing. These tests would examine how companies’ long-term business strategies – especially energy companies – will hold up if negotiators are successful this week in achieving an accord that will limit global temperature rise to 2 degrees Celsius. Even if they don’t, political and business momentum for a low-carbon transition is unprecedented – and will only grow stronger.
Many European energy companies are doing these tests and it’s a big reason why some, including Total, are already shifting more capital towards cleaner natural gas and renewables and away from carbon-intensive coal.
But momentum is building to broaden this effort. “We should get all companies to do this,” said Sharan Burrow, general secretary of the International Trade Union Confederation.
Major public pension funds and other investors are also being pressed to do portfolio-wide stress tests.
Dozens of other ideas were highlighted for building a truly low-carbon economy – among the biggest, ending fossil fuel subsidies. Morocco, which has set a goal to get half of its power from green energy by 2030, has already taken this bold step. “It required political courage, but it sent a strong message,” Morocco’s energy minister said on Saturday.
U.S. pension funds are also advocating for changing the composition of corporate boards, especially at energy companies. Dozens of shareholder resolutions were filed with energy companies last year requesting that they diversify their boards.
“We need climate competent boards,” said Jack Ehnes, CEO of the California Teachers’ Retirement System, which manages nearly $200 billion in assets.
Ehnes also highlighted the important work of the Sustainability Accountability Standards Board, a nonprofit group pushing to strengthen and standardize corporate reporting on climate risks and other sustainability challenges.
As I return home from Paris, regardless of the final outcome, one thing is clear: the time has come to re-tool our global economy for a low-carbon future. Many businesses and investors are ready, but we’ll need to accelerate and broaden the effort – and do so quickly.