Carbon exposure and Subprime meltdown

Erik Mather, managing director of Regnan:

…there were parallels between the subprime meltdown in US markets and questions about carbon exposure and prices. In both cases, he said, risks and exposures were spread so wide that no one knew exactly where they lay.

Institutions would put pressure on companies for fuller disclosure because the market demanded certainty, he said.

“What we have learned is that markets are good at pricing risk but they are lousy at pricing uncertainty,”
Mr Mather said. As a result, superannuation funds with holdings across the entire market were now more likely to put more heat on companies for disclosure on environmental, social and governance issues. The issue of carbon pricing and carbon taxes alone could affect share prices.


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