Bloomberg’s efforts to combine our business expertise with a desire for meaningful change were recently rewarded with the Environmental Leader Product & Project Award for our Carbon Risk Valuation Tool. The Environmental Leader Product & Project Award recognizes excellence in the areas of environmental and sustainability management.
As an organization, and as detailed in our most recent Sustainability Report, we recognize that to create true and enduring sustainable legacy we need our efforts to have both an internal and external impact. For example, increasing transparency in relation to sustainability issues – both risks and opportunities – encourages better investment decisions and development practices. We believe that our products and services should support the growth of sustainable and responsible investment. And we believe we should offer a straightforward way to access comprehensive, quality sustainable finance information at no extra cost to our subscribers.
Our Carbon Risk Valuation Tool does that by helping companies and investors better quantify the financial risk from exposure to high-carbon assets. This tool grew out of the concept of “stranded assets” – a concept elevated by organizations like the Carbon Tracker Initiative, Generation Foundation, General Investment Management’s advocacy group, and others (http://www.bloomberg.com/news/2013-04-18/carbon-intensive-investors-risk-6-trillion-bubble-study-says.html). The hypothesis is that because of concerns over climate change, the extractive industry (i.e. oil and gas extracting, dredging, mining, etc.), may need to keep a significant portion of their oil, gas and coal reserves “stranded” in the ground. This, in turn, lead to what some – particularly Carbon Tracker – are calling a “carbon bubble.”
To begin the conversation on how to measure and manage the potential market and financial impacts of this scenario, we have created to date the first valuation tool that seeks to quantify the potential associated financial risks to companies, investors and portfolios should these reserves indeed be left in the ground.
While this tool is still very much in beta, the award signifies that our initial efforts on this issue could prove beneficial for our customers, the global financial markets and the broader public good.
Contributed by Dan Doctoroff, Chief Executive Officer and President of Bloomberg L.P.