The potential over-evaluation of fossil companies and assets might influence the financial sector negatively. The carbon bubble is discussed in the literature in recent years and diverse studies try to quantify the impact of the carbon risk exposure on portfolios, financial institutions and the financial system. Weyzig et al. (2014) evaluate the carbon risk exposure of European pension funds, insurances, banks and finally the European financial system. Have financial institutions changed their investment strategy and portfolio selection with regard to carbon risk?
See Weyzig, F., Kuepper, B., van Gelder, J. W., & van Tilburg, R. (2014). The price of doing too little too late. The impact of the carbon bubble on the EU financial system. A report prepared for the Greens/EFA Group–European parlament. Sustainable finance lab, Profundo, Green European foundation. The report was commissioned by: The greens, European free alliance in the European parliament.