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Foreword (partial) "Our financial system has gone through a variety of bubbles. The real estate bubble, the commodity bubble, the dot-com bubble. A potential new one is emerging: the carbon bubble. Public and private financial institutions continue to pour millions into fossil fuel companies, inflating their share prices, as if their fossil reserves will always sell on the market. This is a wrong assumption. Instead, if we are serious about limiting global warming to 2 degrees Celsius, these reserves must be kept firmly in the ground, which would turn them into stranded financial assets. McKinsey and the Carbon Trust have calculated that this could endanger more than 30-40% of company value. Popping this bubble could therefore create a carbon shock with severe consequences for our financial system. With this study, we want to follow the money trail behind the carbon bubble and analyse the resilience of our financial system against a possible carbon shock. For this purpose, the study has investigated the exposure in high-carbon assets of 43 of the EU’s largest banks and pension funds and calculated their potential losses under a variety of scenarios."

Additional Nematrian Commentary This paper was published on behalf of the Greens/EFA Group in the European Parliament. It highlights EU banks and pension funds that would be hardest hit if the "carbon bubble" was to burst.

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