Most likely, your company has plans for reducing its greenhouse gas footprint through a combination of direct action and expectations of actions taken by others in the supply chain. Frequently, that involves reduced use of fossil fuels in transportation, energy production and raw materials like chemicals/plastics. But fossil fuel companies see a different future according to an article from Net Zero Investor:
“…if bond markets are to be believed, oil will remain a crucial part of the global economy [through 2050]. Despite high interest rates leading most bond issuers to shorten the duration of their debt, the world’s largest fossil fuel producers have been increasing their issuance of long-dated debt…”
Certainly, others see things differently. The International Renewable Energy Agency’s (IRENA) announced this week that “81% of renewable additions in 2023 were cheaper than fossil fuel alternatives, offering countries a compelling business and investment case to triple renewables by 2030.” The Net Zero Investor piece pointed out “[i]f the International Energy Agency’s forecasts for the Energy Transition prove accurate, global oil prices could drop by more than 70% by 2050.” Yet these points apparently aren’t persuasive:
“… this possibility does not appear to be factored into bond markets… [which] seem to operate on the assumption that a decline in oil prices and the resulting erosion of profits for these firms simply won’t occur.”
Sustainability leaders, staff and advisors: We tend to suffer from confirmation bias – seeking out and relying only on data aligned with our position and goals. Using data and evidence to support a business strategy is obviously the right approach. At the same time, you must keep an eye out for developments that threaten achieving the end goals. If counter-trends materialize, knowing about them early allows more opportunity to course-correct as soon as possible. Of course, as I wrote yesterday, make sure you rely on information/data sources that resonate with company leadership.
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