According to the International Energy Agency (IEA), unabated combustion of all the present fossil fuel reserves will emit over three times more emissions than the remaining carbon budget for 1.5°C of global warming, pushing temperatures to catastrophic levels.  

Given the critical situation and its substantial contribution to global emissions, the oil and gas sector has to seriously consider what role, if any, fossil fuels can justifiably play in the decarbonization of the global economy. As the world moves towards the goal of net-zero emissions by 2050, the sector faces significant transition risks ranging from increased policy and societal pressure to legal and market risks. Without major changes to their current business models, companies in the sector are expected to rapidly lose market value. 

Designed for banks, investors and insurers, this brief provides specific guidance and recommendations for financial institutions with clients in the oil and gas sector to mitigate risks and support client transitions. Through case studies and practical recommendations, it calls for a strategic approach to reduce financial firms’ financed emissions and operationalise net-zero commitments. 

This brief is part of a series covering the following major economic sectors and their associated physical and transition climate risks. All these resources are part of the UNEP FI Risk Centre which helps members take an integrated approach to sustainability risks and aims to accelerate the move a sustainable financial and economic system.