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Bloomberg Launches Carbon Risk Tool for Investors

Bloomberg has launched a tool to help investors determine how climate change might affect companies’ earnings and share prices.

The Bloomberg Carbon Risk Valuation Tool illustrates the potential financial impact on companies — focusing on those in extractive industries such as coal, oil and natural gas — under carbon pollution constraints, Bloomberg says. It offers five scenarios:

  • 5 percent annual decrease in oil prices starting from 2020 relative to the futures price;
  • $50 a barrel for oil from 2020;
  • $25 a barrel for oil from 2030;
  • 80 percent decrease in EBIT fading in from 2020 and peaking in 2035: Prompt Decarbonization; and
  • 80 percent decrease in EBIT fading in from 2030 and peaking in 2035: Last-Ditch Decarbonization.

The company says the tool will also help its clients meet disclosure requirements and standards, from the Asset Owners Disclosure Project to the Sustainability Accounting Standards Board. It also plans to expand the tool beyond carbon to incorporate other environment-related risks.

In October, a group of 70 investors with more than $3 trillion of collective assets under management sent letters to 45 of the world’s top oil and gas, coal and electric power companies, requesting that they calculate the financial risks that climate change poses to their business plans and share this information by their 2014 shareholder meetings.

 

 

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