The Price of Doing Too Little Too Late


This report estimates the exposures of EU financial institutions to fossil fuel firms and commodities. It analyses a key component of the potential impact of the carbon bubble on the EU financial system. It estimates the exposures of 23 large EU pension funds and the 20 largest EU banks to oil, gas and coal mining firms. For equity investments and corporate loans, the analysis identifies individual shareholdings in, and syndicated loans to, approximately one thousand fossil fuel firms, using financial databases. For corporate bonds, it makes a rough estimate of the exposures of financial institutions on the basis of their general asset distribution and bond market indices. Pension fund investments in fossil fuel commodities are estimated as well. The exposures of the investigated financial institutions are then scaled up to the total EU pension sector and all EU-based banks. The report also estimates exposures for the EU insurance sector, using aggregated data on the asset composition of insurance companies. The exposures relate to fossil fuel firms and commodities only and do not cover exposures to other sectors that could be affected by the carbon bubble, which are also substantial. The estimates are based on externally available data and have not been verified by the financial institutions.

“The Price of Doing Too Little Too Late”. The impact of the carbon bubble on the EU financial system (Green New Deal Series volume 11, February 2014)