The UN recently issued warnings over the impact of climate change, pollution, and environmental damage, and how many countries are being too slow in taking action. However, a recent report shows that policies designed to deal with this are having an effect.
The report, which was commissioned by the UN-backed Principles for Responsible Investment, shows that, thanks to these policies, it’s likely that carbon-intensive firms will lost 43% of their value, while more progressive companies could see their values increase by as much as 33%.
The study suggests that there will be major winners and losers in all major sectors. For example, car manufacturers who adapt and transition quickly to electric vehicles are predicted to increase their value by an average of 108%. Those who move slowly could see their value fall.
Some of the largest companies in the oil and gas industry could, in the coming years, lose around 31% of their value, while the biggest coal companies could see their value drop by as much as 44%. Companies who switch to renewables could see their value go up by 104%.
In the agricultural industry, firms which use more sustainable biofuels, or that switch to non-beef protein sources could gain another 10% on their current value. Cattle farmers, however, stand to lose out, possibly losing between 15 and 43% of their value, depending on their practices.
Fiona Reynolds, CEO of the Principles for Responsible Investment, said: “This analysis underscores the extent to which markets are under-pricing climate transition risk. One in five of the world’s most valuable companies are impacted by at least 10% in either direction.”
She added: While the market-level effects of an abrupt policy response to climate change may appear manageable, this masks a much more complex and significant story, with some huge winners and losers emerging between sectors and within them. We are calling on investors to get real on climate policy risk, and this robust modelling exercise and analysis will enable them to do that.”
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