A new study led by the University of Waterloo in Canada has identified the ten financial actors with the most influence on the fossil fuel economy and outlined the major role they can potentially play in helping de-carbonize our planet’s future. The analysis revealed that these ten most influential actors – including investment advisors, governments, and sovereign wealth funds – own 49.5 percent of potential greenhouse gas emissions from the world’s largest energy companies.
“This shows us that both investors and governments can be at the forefront of change if citizens and clients urge them to de-carbonize,” said study lead author Truzaar Dordi, a doctoral candidate in Sustainability Management at the University of Waterloo. “A concentrated number of investors with the potential to influence the trajectory of the fossil fuel industry is either a problem, or an opportunity, depending on how you see things.”
“If they’re serious, capital markets can enable a low-carbon transition within the top coal, oil, and gas reserve owners in the world. Recent pledges to reduce carbon exposure in investment portfolios and engagement with the fossil fuel industry indicate we may already be moving in that direction,” he added.
In their article, Dordi and his colleagues have outlined specific ways in which these 10 financial actors could make changes that may help mitigate global warming, including public disclosures of a scheduled phase-out of fossil fuel financing, rigorous assessments of a portfolio’s exposure to climate risk in a 2°C warmer world, and alignments of investment portfolios with a 1.5°C scenario.
“Individually, reducing the demand for fossil fuels by driving and flying less and turning off the air-conditioner are great. We should keep doing that. But we also need to reduce our production of fossil fuels, which these 10 actors can lead. Without them, we simply won’t have what it takes to meet our emissions targets and avoid catastrophe,” Dordi concluded.
The study is published in the journal Environmental Innovation and Societal Transitions.