How Your pension is Being Used in a $6 Trillion Climate Gamble
By Bill McKibben and Jeremy Leggett /

Suppose you weren’t worried that we humans are destroying our water supply and eroding our ability to feed ourselves by burning coal and gas and oil and hence changing climate. Suppose you thought that was all liberal hooey. What might worry you about fossil fuels instead? How about a six trillion dollar bet, including a big slug of your own money, on people not doing what they have said they are going to do, and that some have already sworn to do in law? 

Photo: The tailings pond at the Syncrude mine north of Fort McMurray, Alberta, Canada. Tar sands could become a 'stranded asset', campaigners say. (Credit: Ashley Cooper pics/Alamy)

Six trillion dollars is what oil, gas, and coal companies will invest over the next ten years on turning fossil fuel deposits into reserves, assuming last year’s level of investment stays the same. Reserves are by definition bodies of oil, gas or coal that can be drilled or mined economically. Regulators allow companies, currently, to book them as assets, and on the assumption that they are at zero risk of being stranded - left below ground, "value"unrealized - over the full life of their exploitation. Yet a report published today shows they are at very real risk of being stranded, and in large quantity. 

Governments agreed in 2010 to keep global warming below two degrees. The Carbon Tracker Initiative, a group of concerned financial analysts based in London, has teamed up with the Grantham Institute, a climate research centre, to calculate how much carbon it would take to reach that two degree threshold, and what it means for the capital markets. By this calculation, fully 60 to 80% of oil, gas and coal reserves listed on stock exchanges are unburnable. 

The six trillion dollar bet is that this calculation remains entirely theoretical, and that fossil-fuel companies will be allowed to keep pumping up the carbon bubble by investing more cash to turn resources into reserves, and continue booking them at full value, assuming zero risk of devaluation. It's a bet that effectively says to government: “nah, we don’t believe a word you say. We think you’ll do nothing about climate change for decades."

Yet the British government, for one, has signed its targets into law, and the Copenhagen Accord brokered by the Obama administration in 2009 specifically sets 2 degrees as its goal. And all governments at the most recent annual climate negotiations have agreed to set legally binding targets at the 2015 climate summit in Paris.

Both companies and ordinary citizens ought to be very worried by this disconnect between capital markets and climate policymaking. This is because so much of the value of stock exchanges involves pension money, and so much of peoples’ prosperity hinges on the value of their pensions. HSBC recently calculated that shares in coal companies could be devalued by 40-60% in a world acting on the climate threat.

Yet vast pension assets are invested in coal. The ratings agency Standard and Poor’s recently concluded that the business models of tar sands companies could be invalidated in a world acting to constrain carbon. Yet vast pension assets are invested in tar sands.

The six trillion dollar bet also involves two mandatory side bets. The first is that the news on climate change doesn’t get worse than it already is, so putting governments under even more pressure to act on carbon than they already are.

Sadly, we and many like us think it will, especially as natural amplifiers to global warming, like melting permafrost, kick in. For this reason we think that the Carbon Tracker Grantham figures are conservative: if they are wrong, they are much more likely to be wrong on the down side. 

The second side bet is that the new civil resistance to fossil fuels won’t add significantly to the pressure on governments to act. We think it will, for reasons you can see on the website, and in the rising tide of peaceful direct action on streets, in campuses, on solar rooftops, and elsewhere across society. 

The pooled message to regulators, from Carbon Tracker analysts and activists alike, is clear. Do your job. Start requiring recognition of stranded carbon-asset risk in capital-markets processes. Start deflating the carbon bubble before it pops. 

The message to all the players across the financial chain, from ratings agencies through accountants, to actuaries, investment advisors and all the rest, is also obvious. If the regulators won’t do their job, do it for them. Jump, before you are pushed.

Bill McKibben

Bill McKibben is Schumann Distinguished Scholar at Middlebury College and co-founder of His most recent book is Eaarth: Making a Life on a Tough New Planet.

Jeremy Leggett

Jeremy Leggett is Chairman of Carbon Tracker. He is author of The Carbon War and Half Gone.


3.5 ·
What's Next
Trending Today
Noam Chomsky Has 'Never Seen Anything Like This'
Chris Hedges · 13,764 views today · Noam Chomsky is America’s greatest intellectual. His massive body of work, which includes nearly 100 books, has for decades deflated and exposed the lies of the power elite...
Your Lifestyle Has Already Been Designed (The Real Reason For The Forty-Hour Workweek)
David Cain · 10,831 views today · Well I’m in the working world again. I’ve found myself a well-paying gig in the engineering industry, and life finally feels like it’s returning to normal after my nine months...
25 Mind-Twisting Optical Illusion Paintings by Rob Gonsalves
Dovas · 6,636 views today · The beautiful and mind-bending illusions in Canadian artist Robert Gonsalves’ paintings have a fun way of twisting your perception and causing you to question what in his...
No Moral Superpower: Arundhati Roy, Edward Snowden, and the Crimes of Empire
Jake Johnson · 6,145 views today · When Arundhati Roy was preparing, in 2014, for a trip to Moscow to meet Edward Snowden, she was troubled by two things. One of them was the fact that the meeting was arranged...
Forget Shorter Showers: Why Personal Change Does Not Equal Political Change (2015)
11 min · 5,243 views today · Would any sane person think dumpster diving would have stopped Hitler, or that composting would have ended slavery or brought about the eight-hour workday; or that chopping...
Dinosaur explains Trump policies better than Trump!
8 min · 3,752 views today · Donald Trump is actually the corporate triceratops, Mr. Richfield, from the 90's TV show sitcom, "Dinosaurs". 
What Makes Call-Out Culture So Toxic
Asam Ahmad · 3,170 views today · Call-out culture refers to the tendency among progressives, radicals, activists, and community organizers to publicly name instances or patterns of oppressive behaviour and...
Men Loving Men
Bianca Vivion · 2,935 views today · When my father was seven he and his best friend Phil cut their index fingers open and placed them together to create a “blood pact” that they would always be brothers. To this...
The Empire Vs. The People - Police Attack and Arrest Peaceful Protestors at the Dakota Access Pipeline
6 min · 1,873 views today · On October 22, just before dawn, hundreds of people, including many families, gathered and prepared to march toward the Dakota Access pipeline construction site near Standing...
These Incredible Stories Remind Us of Our Better Selves
36 min · 1,807 views today · #WhoWeAre is a campaign to share the stories of people whose actions show us compassion and to send a message of empathy, hope and optimism. These videos will automatically...
Today I Rise: This Beautiful Short Film Is Like a Love Poem For Your Heart and Soul
4 min · 1,770 views today · "The world is missing what I am ready to give: My Wisdom, My Sweetness, My Love and My hunger for Peace." "Where are you? Where are you, little girl with broken wings but full...
And After the Election, The Reaction
Ret Marut · 1,731 views today · Could there be any better illustration of the shortcomings of representative democracy than this year’s Presidential campaign? For months upon tiresome months, the whole world...
The Burden of the New Story
Adebayo Akomolafe · 1,637 views today · The 'new story' - that longed for milieu when all is right with the world and things are set straight - seems to be taking its sweet time coming. Why?
Writers Tom Hayden and Naomi Klein Talk About Journalism and Activism
27 min · 1,461 views today · Author, Activist and Former California State Senator Tom Hayden talks in depth with the author of No Logo and The Shock Doctrine, Naomi Klein, about the state of the fourth...
'The Climate of Fear Is Unacceptable' - Ken Loach on I, Daniel Blake
6 min · 1,253 views today · Ken Loach’s Palme d’Or-winning film I, Daniel Blake tells the story of a man who is denied disability benefit after a heart attack and who is then subsequently caught in a...
Three Massive Mergers - Millions for One Bank and a Disaster for Food, Water, and Climate
Wenonah Hauter · 909 views today · In addition to advising on all three mega-mergers, Credit Suisse is playing a big role behind the scenes of the Dakota Access pipeline.
The Top 100 Documentaries We Can Use to Change the World
Films For Action · 762 views today · A more beautiful, just and sustainable world is possible. Take this library and use it to inspire global change!
John Lennon's "Imagine," Made Into a Comic Strip
John Lennon. Art by Pablo Stanley · 635 views today · This is easily the best comic strip ever made.  Pabl
Ode to Lesvos
5 min · 472 views today · An inspiring story of a few remarkable heroes on the Island of Lesvos who helped almost half a million refugees in 2015 has been documented in a new short film called Ode to...
The White Man in That Photo
Riccardo Gazzaniga · 458 views today · Sometimes photographs deceive. Take this one, for example. It represents John Carlos and Tommie Smith’s rebellious gesture the day they won medals for the 200 meters at the...
Load More
Like us on Facebook?
How Your pension is Being Used in a $6 Trillion Climate Gamble