There is turmoil in the world of finance – see chapter 4: Influential financial people from Mark Carney, then Governor of the Bank of England, to Larry Fink, chairman and CEO of Blackrock, the world’s largest investment management corporation, warned and initiated a turnaround in investment, moving away from greenhouse gas-intensive power generation.
Europe’s largest oil and gas companies and politicians in some European countries like Germany or Italy may still cling to “natural gas” as a “bridge”. However, public opinion in Sweden and Ireland on new gas infrastructure projects is overturning these dreams and bringing them to an abrupt halt – see Chapter 5. The rest of Europe will follow in the coming years, is only to be expected.
Is the investment management strategy of my pension fund keeping up with these changes? As described in Chapter 6: Hardly. For the financial world, this is an unknown situation. Looking at current reactions in the COVID crisis it is very likely the asset managers will react too late. Their investments in gas will lose a lot of value. Perhaps they can be sold for a small sum, or become completely worthless. What will happen to my personal retirement entitlements when these losses happen?
Will I draw less pension than expected? Likely! Unless safeguards are in place… But I have never heard anything about that.
The only good news is that pension funds spread their investments, so the losses will be limited. Current funds have 5-10% of their investments in fossil companies, data research shows. Worst case, my pension will be 10% lower.
The effects of climate change on all companies is a different story. All companies will suffer from climate change (floods, droughts, storms,…) and have lower profits. How much, is not known, but the numbers estimated are big: more than trillions each year. The only prevention for that, is a very quick energy transition (which will hit fossil fuel producers obviously). So in a decade or se we either all suffer a lot, or the fossil fuel industry loses about everything.
What exactly will happen if fossil companies assets lose their value? I am going to find that out.