The Oxford Sustainable Finance Programme and E3G win the French Social Investment Forum and UN Principles for Responsible Investment prize
At a ceremony at Mirova's headquarters in Paris the Oxford Sustainable Finance Programme at the University of Oxford Smith School of Enterprise and the Environment and environmental think tank E3G won the FIR-PRI Award for the Best Pedagogical Innovation in Sustainable Finance.
The prize was won for the "2°C Pathways Wargame". The wargame, which took several years to develop, is used to explore the different pathways oil & gas companies can take under different scenarios to assess which business models are the most likely to be successful.
Currently up to 40 participants can individually or in teams represent specific oil & gas companies and play against each other via an online platform. They simulate decisions about strategy and investments to position companies within the industry over the next 30 years.
Ben Caldecott, founding Director of the Oxford Sustainable Finance Programme at the University of Oxford Smith School of Enterprise and the Environment said, "Oil majors are coming under increasing pressure from shareholders and civil society to develop and disclose business plans in line with the Paris Agreement. Our wargame helps companies, investors, governments, and civil society to scan, test, and then identify plausible strategies for oil & gas companies to be compatible with the energy transition underway."
"We can now systematically test oil & gas company business plans against every energy transition and climate scenario, including those developed by the companies themselves. Not only is the wargame great fun and has something for everyone - from the professional oil & gas analyst to the NGO campaigner with no experience of finance or the energy sector - it can generate very valuable insights for a range of stakeholders."
Shane Tomlinson, Director at E3G, said, "Wargaming provides a number of unique insights and tools with which to assess the impact of climate change on oil & gas company business models. Simulating decision-making under uncertainty reveals the behavioural and strategic considerations that oil & gas majors face which are not captured in perfect information models. In particular the wargame revealed significant path dependency to managing company debt levels, herd behaviour in trying to 'run for green' assets, and the potential destruction in shareholder value from multiple firms attempting to be the last one standing'. By better understanding these dynamics both markets and policymakers can make smarter decisions in the future to manage the impacts of climate risk."
A report detailing the wargame and the implications of its capabilities can be found in this report, 'Crude Awakening: Making Oil Major Business Models Climate-Compatible', published in March 2018