Many UK oil and gas companies are underestimating the financial risks linked to the net zero transition, according to a new study led by researchers from Loughborough University and institutions in France.
The findings warn that inadequate disclosure could leave investors exposed and company accounts overvalued.
The study, published in Global Environmental Change, reviewed corporate reports and included 22 interviews with industry insiders.
It found that fossil fuel companies risked higher borrowing costs, limited access to capital and significant asset write-downs — with smaller operators in the North Sea particularly at risk.
“These risks threaten the going concern of some oil and gas companies, lower market value, and have knock-on effects on the wider energy supply chain and government revenues,” said Dr Freeman Owusu of Loughborough University Business School.
The research found that current reporting frameworks — including TCFD, CDP and ISSB — often fail to reflect the specific financial risks facing fossil fuel companies during the transition.
The authors called for more detailed disclosures on ESG performance, remaining reserves and plans for asset impairments.
Dr Owusu added: “What is particularly concerning is the lack of transparency.
“Our research highlights a disconnect between the magnitude of these risks and the level of disclosure currently provided by oil and gas companies.”
The paper argues that clearer, forward-looking financial disclosures are essential to maintain stakeholder trust, meet policy expectations and allow informed investment decisions.
“Honest, transparent financial reporting will be key to navigating these changes and making sound decisions,” Dr Owusu added. “Reaching net zero is vital for a sustainable future but it comes with real economic risks for carbon-heavy sectors.”
