Mark Campanale- 2024 – Unburnable Carbon: Reckoning with Global Stock Markets and Climate Targets


Synopsis:  Global stock markets are financing companies which are sitting on three times more coal, oil and gas reserves[1] than can be burned without breaking the 1.5°C Paris climate target. The “embedded emissions” in the fossil fuel reserves of companies listed on global stock exchanges – the amount of CO2 released if they are extracted and burned – has grown by nearly 40% from 2011-2022 despite a growing urgency to tackle climate change risks. 

Unburnable Carbon: Ten Years On, further warn that 90% of all known fossil fuel reserves and resources held by all companies must stay in the ground as unburnable carbon to limit global warming to 1.5°C. But if more than 40% of reserves are extracted and burned the world will comfortably pass 2°C , with significant major consequences to the planet. 

At the start of 2022, only 320 billion tonnes of greenhouse gases (320 GtCO2) can be emitted for a 66% of limiting warming to 1.5°C .  Between 2022 and 2024, this budget declined by a further 80-100 GtC02, so at current rates of emissions this will be exhausted in just five-six years, by 2030

The report reveals that the total embedded emissions of all known fossil fuel reserves is more than 10 times that level at around 3,700 GtCO2. A large share of this is controlled by state-owned or private companies but 1,050 GtCO2 is owned by companies that trade publicly on global stock markets and can be influenced by investors. 

New York is the financial centre with the greatest embedded emissions from freely tradable shares, with 160 GtCO2 listed between the New York Stock Exchange and the NASDAQ, followed by Moscow, Toronto, London and Sydney. 

  1. The London Stock Exchange for instance holds 47 GtCO2 of embedded emissions – 30 times more than those of the UK’s own fossil fuel reserves (1.5 GtCO2) and ten times more than its 15-year carbon budget from 2023-37 (4.7 GtCO2). 

The London Stock Exchange had the second highest market capitalisation of listed fossil fuel companies at $500 billion but they made up 15% of value on the exchange at that date, making it far more exposed. Only around half of the future ‘business as usual’ spending by oil & gas companies listed in London was found to be compatible with 1.5°C . 

  1. New York is the financial sector least aligned with Paris and at greatest risk from stranded assets. If listed oil & gas companies pursue business as usual, they would spend $700bn in the decade to 2030 – but just 20% on projects compatible with 1.5°C . On 22 February fossil fuel companies had a total market capitalisation of $1.4 trillion accounting for 3% of the value of the NYSE and NASDAQ. 
  1. Sydney is also notable both for having the second-lowest degree of alignment under a 1.5°C scenario, with just 30% of future spending compatible with 1.5°C  and a large share of potential future spending incompatible with even a 2.7°C scenario. 
  1. Toronto has the fourth-largest embedded emissions by a freely-tradable share measure (behind New York, Moscow and Shanghai), but companies with fossil fuel reserves make up only 8% of the total market capitalisation. Only 40% of future ‘business as usual’ oil & gas spending is compatible with 1.5°C .  

The report warns that supporting these companies makes the UK’s financial transition to a low carbon economy harder and that even though their fossil fuels may be produced and consumed overseas, it exposes the country’s financial services sector and UK-based investors to risk in the energy transition. 

Financial centres in China, the US, India, Russia and Saudi Arabia have the highest embedded emissions overall. In all but the US, they are dominated by the partial listings of state-owned companies, where minority shareholders have limited influence. 

The report says that stock markets are failing to respond adequately to the risks of the global transition to a carbon neutral energy system. This is not only putting investors at risk but also threatens the wider ecosystem of banks, insurers, lawyers and financial services.  We recommend that the concept of a ‘carbon budget’ is introduced into the Competent Persons Report and global reserves reporting, so that reserves viability for coal, oil and gas is subject to a new ‘atmospheric viability test’ by stress testing future production against different IEA demand scenarios, linked to the Paris Climate Agreement. 


Mark is the founder of the Carbon Tracker Initiative, a non-profit think tank with offices in the US and UK, having enjoyed a career in sustainable finance for 20 years. Carbon Tracker is best known for its work on ‘stranded assets’ and the ‘carbon bubble’ and providing transition analysis for the members of Climate Action 100+  These concepts are also used by for investors & regulators in how to set decarbonisation pathways for the fossil fuel sector. 

Prior to forming Carbon Tracker, Mark is a co-founder of some of the first responsible investment funds at Jupiter Asset Management, NPI, AMP Capital, and Henderson Global Investors. Mark has served on the World Business Council for Sustainable Development working group on capital markets leading up to the 1992 Earth Summit; was a Member of the Steering Committee of UNEP Financial Sector Initiative (1999-2003);  founder of the UK Sustainable and Responsible Investment Forum (UKSIF), 1990-2006; and is now on the Advisory Board of GFANZ, the Glasgow Finance Alliance for Net Zero.  A member of the advisory council of the Moore Foundation’s Conservation & Markets Initiative.  He is an Advisor to Faith Invest; a Visiting Lecturer at the University of Cambridge’s sustainable finance programme; and in 2021 and winner of the CEREs/Trillium Capital Lifetime Achievement Award on Sustainable Finance. 

Mark has a BA in Politics & Economic History and an M.Sc in Agricultural Economics.