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Tighter climate policies could erase $2.3 trillion in companies value: report

Published Dec 08, 2019 07:46PM ET
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By Ron Bousso

LONDON (Reuters) - Tighter government climate regulations by 2025 could wipe up to $2.3 trillion off the value of companies in industries ranging from fossil fuel producers to agriculture and car makers, an investor group warned in a report.

Rules aimed at lowering carbon emissions are expected to accelerate in the coming years as countries scramble to meet obligations under the 2015 Paris climate agreement limiting global warming.

Any abrupt policy shifts risk severely disrupting current investment strategies, U.N.-backed Principles of Responsible Investing (PRI), a group representing investors with $86 trillion of assets under management, said in a report.

"As the realities of climate change catch up, social pressure mounts, and low carbon solutions get cheaper, it's highly improbable that governments will be allowed to let the world sleep-walk into greater rises in temperature without being compelled into forceful action sooner," PRI Chief Executive Fiona Reynolds said.

"This poses huge threats for assets and for the wider system."

Most exposed is the fossil fuel sector which could lose one third of its current value, the report said. Fossil fuels account for around two thirds of global greenhouse gas emissions.

Coal firms could lose as much as 44% in value, while the world's top oil and gas companies risk losing up to 31% of their current market share, according the report which forecasts oil demand peaking around 2027.

The analysis showed that broad index-based funds such as the iShares MSCI ACWI ETF (O:ACWI) could lose up to 4.5% or $2.3 trillion in its value under the most extreme scenario.

The shift would nevertheless also lead to winners.

Auto makers heavily invested in electric vehicles and electric utility firms using low-carbon power could more than double their values, the report said.

The report came out as world leaders meet in Madrid for the 2019 United Nations climate change conference, known as COP25.

(GRAPHIC: Climate investments - https://fingfx.thomsonreuters.com/gfx/ce/7/7712/7694/Pasted%20Image.jpg)

Tighter climate policies could erase $2.3 trillion in companies value: report
 

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Comments (3)
Kaveh Sun
Kaveh Sun Dec 09, 2019 1:21AM ET
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Gov subsidize all green companies. it is Just a waste of tax dollars. if there is profit, companies will jump into it without gov subsidizes.
Steven Chen
Gamer_LG Dec 09, 2019 1:21AM ET
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then what about farm subsidy that goes back decades, or Boeing, etc
John Hat
John Hat Dec 09, 2019 12:33AM ET
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It's all a hoax. An Inconsistent Truth.
Steven Chen
Gamer_LG Dec 08, 2019 8:59PM ET
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lmao. lies. we all know green energy can create a lot of green related economy jobs. kinda like MS Excel didn't reduced bookkeeper to nothing, in fact it allowed more ppl into other fields, creating a wave of new technology such as data centers, accounting softwares, etc...
 
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