Carbon Risks of the Economy and Stress Test for the Financial Sector Navigant supported the German government to detect and mitigate risks related to a carbon bubble October 5, 2018 Challenge The transition to a low carbon economy poses risks to the financial sector. In 2015, the G20 questioned whether investments in fossil-fuel-dependent infrastructure could lead to global financial risks — the so-called carbon bubble. A carbon bubble refers to the idea that companies relying on fossil fuels are incorrectly valued on the stock markets as the true costs associated with climate change and respective policies have not yet been taken into account. Solution As G20 president at the time, the German government by means of the German Environment Agency (UBA) commissioned a consortium to analyze a

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