Al Gore has another inconvenient truth for advisors: it’s time to ditch your assets in fossil fuels.
The former vice president told over a thousand people gathered at the Paris Climate Conference that the investment community should move their assets into renewable energy, not just for moral or social reasons.
“Investors need to look at the pattern that is unfolding lest they be trapped holding stranded assets,” Gore said.
It speaks to a changing mentality around ESG issues in the industry. While once the domain of the values investor, value investors are finding more use for these tools.
“The data can be the same but you can do different things with it,” said Matt Orsagh, director of capital markets policy at the CFA Institute. “A classic values investor could be someone who doesn’t want to invest in tobacco or firearms or gambling stocks for example. A value investor might take that same information and may come to the same conclusion but for a different reason or in a different way.”
Gore pointed to the UN climate effort, work by regions that have launched carbon markets and economic inevitability as three reasons that point to stranded assets in fossil fuels.
“Another pathway to stranding is precisely this dramatic cost down-curve for renewable energy that is competing directly with carbon sources,” Gore said.
Citing the New York Attorney General’s investigation of Exxon, Gore said there are already trillions of dollars of stranded carbon assets, there are illusions that make their value appear higher, and there are active efforts to fool investors.
“Many of the carbon companies are in danger of losing their public license to operate as more and more people realize that we simply cannot continue to put 100 million tons of global warming pollution into the atmosphere as if it’s an open sewer, every single day,” Gore said.
“So a lot of investors are now saying what you have to do: diversify your investments in the low carbon economy, divest first from the riskiest carbon assets… and then invest in the fantastic new opportunities that are emerging in the low-carbon economy.”