New York Partner Andrew Otis was quoted by Law360 discussing climate change and government efforts to reduce carbon emissions and how it could threaten insurance companies still significantly invested in fossil fuel assets, warning that those assets could quickly lose their value in the transition to a green economy and have fueled calls for further disclosures and are creating novel legal risks. Otis noted he felt insurance carriers are looking at the risk of stranded assets, but he added that it wasn't clear to him that those risks were guiding their investments. Fossil fuel investments still made up about 9 percent of total investment by insurers licensed to do business in California, he discussed, citing an April report conducted for the state's insurance department.
"I think they're still waiting for more certainty," Otis said. "They're waiting to see if they can identify tipping points for when assets are more likely to become stranded."
In addition to fossil fuel assets, Otis noted that commercial and residential assets at higher risk of flooding could become stranded or lose value as a result of climate change. Something similar could be said of assets in areas prone to wildfires, he added.
Read the full Law360 article here (subscription may be required).
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