This month, S&P Global Market Intelligence's Energy Evolution dives into the growing trend of bankers, insurers and other parts of the financial industry ditching fossil fuels to help stave off the worst impacts of climate change.

The already growing divestment movement gained some more momentum early in 2020. In January, BlackRock Inc., the world's largest asset manager, announced it would be divesting from certain coal companies. The next month, the Royal Bank of Scotland Group Plc said it would be moving away from financing activities in the coal, oil and gas sectors if those companies do not have credible transition plans in line with the Paris Agreement on climate change in place by the end of 2021.

"We're entering a new era of finance," BlackRock CEO Larry Fink said on the asset manager's recent earnings call. "The investment risks presented by climate change are set to drive a significant reallocation of capital, and companies, investors and governments will all need to be more prepared."

Energy Evolution analyzes these developments and more in an episode aimed at getting listeners up to speed on what is becoming an emerging credit issue for coal companies and the rest of the fossil fuel sector. Experts and representatives from the Sierra Club, Moody's Investors Service, Ceres and Peabody Energy Corp. are all featured on the latest episode.

"I think we shouldn't discount the fact that divestments hurt the company's reputation and reputational risk is, is real, and it's something that companies care a lot about," Sierra Club campaign representative Ben Cushing told Energy Evolution. "That sort of reputational risk, combined with real financial pressures, can have a meaningful impact on the development of fossil fuels."

Peabody is among the largest coal miners in the world. The company's official stance on climate change is that it is occurring, and humans contribute to the problem. However, they insist the solution to the problem is the development of technology like carbon capture and storage, particularly as a means for deploying coal power generation to developing countries.

"Divestment won't stop the demand for fossil fuels and the demand for coal around the world," Svec said. "What it will do is displace responsible producers with those that no one would have any say-so over any of their active governance and so on. So we don't think that's the best approach."

The podcast episode also examines the idea that the oil and gas sector are beginning to find themselves in the same crosshairs of divestment as the coal industry. While the sector may have more time to react to growing climate concerns than the coal sector, how they respond now could make a big difference in their financial fortunes going forward.

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(Photo: AP)