The BP oil spill showed us how environmental issues can become financial problems. Climate change is an obvious risk that will affect company operating costs and profits – and therefore our investments – in the future.

Billions of dollars and pounds are going into oil companies through our banks, taxes and pension funds. That means that our money has been and continues to be used to get at increasingly risky oil deposits.

Shell and BP are two of the key companies that our pension providers typically invest in heavily. In the past this has meant big returns for our pension funds. Before the Deepwater Horizon oil spill, £1 in every £7 paid in dividends to UK pension funds by FTSE 100 companies came from BP. With about 18 million people across the UK holding shares in the company or paying into pension funds that have BP shares and many more with links to other oil companies, we’ve all got a lot invested in keeping the oil industry going. But this also carries a big risk for our future.

Since the oil spill, BP has been forced to cancel dividend payments to shareholders, which will affect pension investments. BP downplayed the risk of a spill at Deepwater Horizon and was, by its own admission, totally unprepared to deal with the consequences. In an interview with the Financial Times published on June 2 2010, BP Chief Executive Tony Hayward “accepted it was ‘an entirely fair criticism’ to say the company had not been fully prepared for a deep-water oil leak”.

But beyond the immediate consequences of pursuing more dangerous sources of oil, there are worrying signs that BP and other oil companies could prove similarly unprepared to deal with the human, environmental and financial challenges of climate change. At BP’s AGM in April 2010, the company chairman confirmed that its business strategy is based on a scenario drawn up by the International Energy Agency (IEA) which the IEA themselves say would result in “catastrophic consequences for our climate”.

This strategy assumes the oil demand will continue to grow and does not take into account government efforts and regulation to reduce global carbon emissions. If oil companies are not taking climate change seriously, and do not have a long term strategy to transform their business and reduce their emissions, that means they are also risking the long term interests of shareholders and pension fund members. They’re also increasing the likelihood of catastrophic climate change.

The impacts will be far reaching as climate change has the potential to impact on other businesses and create a huge financial crisis that would destroy much of the value of our other pension investments. This means that it is in our financial interest that our pension providers take steps to future-proof themselves against the risks associated with oil companies.