Memorandum – Financial Risk and Decarbonisation

Financial Sector Risk Management

The financial sector perceives their greatest financial risk over the next decade is potential erosion of value if investments are not resilient to the impacts of climate change. This is expected to translate into restrictions on the availability and access to debt, equity finance or insurance at commercial terms.
This shift in investor sentiment has three significant implications for O&G producers:
1. Banks are reducing their exposure to hydrocarbon projects by:
– Either not lending to projects as a matter of policy, or
– Making investment terms increasingly onerous, forcing organisations to reconsider the asset
economics, to divest high emitting assets or insisting on credible decarbonisation strategies

Published:  March, 2021

Financial Risk and Decarbonisation