Last week, a statement by Mervin King caught some interest in the media about Fossil Fuels Being Subprime - I finally got a chance over the weekend to read it properly, and digest what it meant.
So in short, if 5 of the top ten companies in the FTSE are very carbon intensive, and are valued on the basis of being able to exploit resources that they will not be able to exploit, then there's a gaping chasm in the listed value, and actual value of both these companies, and the pensions invested in them.
Valuations of the oil and gas sector still assume that they will be able to take all proven and probable reserves out of the ground and burn them. "Based on credible data we cannot be allowed to do that,"
at least one-half of fossil fuel assets will have to be left in the ground,”.... “We’re still pricing [companies in the extractives sector] as if they are all going to be exploited.”
So this begs the question - if everything is totally mispriced, what SHOULD they be priced at?
And if I have a pension of 100k saved up ( I don't), how much would it really be worth?
In the space of a weekend, would it be possible to create a prototype FTSE 100 listing, where the valuations are adjusted for these factors, or a calculator build to show you what a pension of say, 100k would really be worth?
I'm going to be at the London Green Hackathon this weekend.
Let me know if you'd be interested in looking at this, as I think it would make for a fascinating hack.