A majority of large carbon emitters overlook climate risks in their financial statements

According to a new study by the Carbon Tracker initiative and the Climate Accounting Project, more than 70% of the world's largest carbon emitters, including Chevron and ExxonMobil, did not consider climate in their 2020 financial statements and did not provide any indication of why climate change might not be material to their operations. De plus, 80 % des vérificateurs n'ont pas semblé évaluer les effets des risques climatiques lors de la vérification financière de ces entreprises.

In response to the study, British, Danish and Swedish institutional investors, who manage more than US$2.5 trillion in assets, have called on governments to force companies to report the financial consequences of global efforts to limit warming below 1.5 degrees Celsius. On September 20, 2021, Reuters reported that these investors argue that financial statements that "accounts that leave out material climate impacts misinform executives, shareholders, and creditors and, thus, result in misdirected capital". They consider it essential that companies clarify the financial impact of climate change so that they can make informed investment decisions consistent with the goals of the Paris Agreement.

It should be noted that the absence of climate risks in the financial statements of large carbon emitters is puzzling, to say the least, given the commitments made by some of them to fight global warming, such as achieving carbon neutrality, and the significant financial risks associated with the climate crisis, such as stranded asset risks for oil, gas and coal companies. To survive and fulfill their responsibilities to their stakeholders, many companies will have to adapt quickly and fully engage in the energy transition, starting with those operating in the hydrocarbon sector.

In October 2021, the International Energy Agency issued serious warnings, nailing "business as usual and fossil fuel resistance". It believes that the "transition is too slow" and that unless we invest more heavily and quickly in clean energy to meet future needs, we will experience not only uncontrollable warming, but also "turbulence" in supply. In May 2021, the Agency stated that in order to avoid a rise of more than 1.5 degrees Celsius above pre-industrial levels and achieve carbon neutrality by 2050, we must stop all new oil and gas exploration projects. In addition, we must prepare for 90% of electricity to come from renewable sources in 2050, while fossil fuels will only provide 20% of energy, compared to 80% today.

A study published in the journal Nature on September 8, 2021 goes even further. According to the researchers, to allow for a 50% chance of limiting warming to below 1.5 degrees Celsius, 60% of oil and gas reserves and 90% of coal reserves will have to remain underground. In addition, oil and gas production is expected to decline by 3% each year globally until 2050. However, humanity seems to be on the opposite trajectory. On 20 October 2021, the United Nations published the 2021 Oil and Gas Production Gap Report, which shows that despite their declarations and commitments to the climate, States are planning to produce more than twice as much fossil fuel in 2030 as is compatible with limiting global warming to 1.5 degrees Celsius. At this rate, we will soon no longer be "on the edge of the abyss", to quote UN Secretary General António Guterres, we will have one foot in it.

Sources: United Nations, "Fossil fuel production ‘dangerously out of sync’ with climate change targets", ONU Info, October 20, 2021, ref. October 20, 2021, https://bit.ly/2Zah2Uc ; Catherine Hours, "L’Agence internationale de l’énergie lance un 'sérieux avertissement'", AFP, La Presse, October 13, 2021, ref. October 20, 2021, https://bit.ly/3phyt0p ; Pauline Fricot, "Réchauffement climatique : l’humanité doit se passer de 60 % du pétrole et du gaz et de 90 % du charbon", Novethic, September 29, 2021, ref. October 20, 2021, https://bit.ly/2Z5wuSg ; Simon Jessop, "Investors call for governments to toughen climate accounting - letter", Reuters, September 20, 2021, ref. October 20, 2021, https://reut.rs/3jlkti6 ; Carbon Tracker, Flying blind: The glaring absence of climate risks in financial reporting, September 16, 2021, ref. October 20, 2021, https://bit.ly/3AXregb ; Dan Welsby et autres, "Unextractable fossil fuels in a 1.5 °C world", Nature, September 8, 2021, ref. October 20, 2021, https://go.nature.com/3B1ukzE ; Ludovic Dupin avec AFP, "Pour l’Agence internationale de l’énergie, tous les nouveaux projets pétroliers et gaziers sont désormais indésirables", Novethic, May 18, 2021, ref. October 20, 2021, https://bit.ly/3E0g1NK ; Nations Unies, "Changement climatique : 'Nous sommes au bord de l’abîme', selon le chef de l’ONU", ONU Info, Avril 19, 2021, ref. October 20, 2021, https://bit.ly/2Xvo9pX