LONDON/NEW YORK, MAY 3 – Oil and gas firms are not disclosing anywhere near enough information for investors to weigh up growing climate concerns that may impact a company’s future production and the long-term viability of its business, a Carbon Tracker report found on Friday, that also illustrates what a ‘model’ corporate climate risk disclosure should look like.

To date the think-tank’s research has shown that it is key future resources and reserves that are still to be developed into producing assets that are at greatest risk of stranding in a low carbon below 2°C world[1]  — but accounting and disclosure practices offer investors little visibility over this variable.

Reporting for a secure climate: A model disclosure for upstream oil & gas analyses current corporate climate reporting trends, including through select company examples, and steps needed to improve transparency over future material risks. For instance, through discussion of key climate, regulatory and technological challenges being faced by the company that will hit demand.

Kate Woolerton, senior accountant and lead author of the report said:

“Investors want reassurance that upstream oil and gas companies are factoring climate-constraints into their capital expenditure strategy. We believe that they could be doing a lot more to communicate this to their investors — our model disclosure illustrates what companies could do, if they applied their best efforts.”

Recently a coalition of 34 central banks and experts working on climate risk, the Network for Greening the Financial System[2], estimated potential losses of transition risk to the energy sector alone of between $1 trillion to $4 trillion. Moreover, Bank of England chief Mark Carney last month again reiterated his stranded assets warning, saying that $20 trillion of assets globally could become worthless if climate change and the burning of fossil fuels wasn’t properly addressed.

Adding to the pressure, a survey of fund managers[3] responsible for $10 trillion of assets, found this week that 86% of managers wanted oil firms to align with the Paris 2015 UN goals, while two thirds (67%) want to switch their investments to low-carbon solutions.

The think-tank’s new report finds that a) No corporate is currently providing close to the level of detail needed in an ideal disclosure and b) Critical financial statements are largely backwards-looking and  therefore this ‘model disclosure’ would be for inclusion in the front-half of the annual report.

Carbon Tracker’s model disclosure seeks to address three key reporting issues in order to assess the long-term climate-related risks of capital-intensive upstream production and exploration:

  • Resources are largely held off balance sheet (with the exception of some costs associated with exploration and evaluation activities);
  • Reserve disclosures (generally located in supplementary information outside of the financial statements) do not include resources and only sometimes include probable reserves; and
  • Management commentary generally focuses on proved reserves only

Current oil and gas disclosures provide little transparency over expected future upstream capital expenditure plans, and importantly the criteria and assumptions applied when deciding which projects to sanction for development.

Carbon Tracker finds the following three disclosures to be critical to any future climate-secure company disclosure:

  • Expected future capital expenditure on exploration and development activities – A forward-looking measure that allows investors to assess the degree to which a company is continuing with a BAU strategy, which may result in stranded assets
  • Transparency over the material assumptions that underpin a company’s upstream strategy —This allows investors to understand whether the company has taken possible future climate-contstraints into consideration when setting their upstream capital expenditure strategy, in particular their expected expenditure on exploration and the key assumptions applied when sanctioning a project for development into a producing asset. For instance, investors may be interested to understand whether the company is assuming ever increasing demand and commodity prices?
  • Sensitivity analysis— This allows investors to assess for themselves the possible impact on the company strategy and financial position of oil and gas prices being lower than expected – it can help them to assess the potential value at risk

Robert Schuwerk, executive director North America, and co-author said:  

“The long-term financial impacts of climate change are clearly material to the upstream oil and gas sector, yet current company disclosures do not go far enough to communicate the extent to which their  capital expenditure plans are addressing this risk.”


The designed report can be downloaded here:


To arrange interviews please contact:

Stefano Ambrogi                                            +44 7557 916940


About Carbon Tracker

The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Our research to date on the carbon bubble unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future.

[1] Carbon Tracker, 2017. 2 degrees of separation – Transition risk for oil and gas in a low carbon world. Available from:

[2] Network for Greening the Financial System, 2019. First Comprehensive Report. A call for action: Climate change as a source of financial risk. Available from:

[3]Published by the UK Sustainable Investment and Finance Association (UKSIF) and the Climate Change Collaboration