Stricter climate standards by 2025 can result in the loss of up to 2.3 trillion dollars in shareholder value of companies. Any abrupt change in policy could lead to a major revision of current investment strategies. This is stated in the report "Principles for responsible investment" (PRI), supported by the United Nations.
it is Expected that the rules, aimed at reducing carbon emissions will be tightened in the coming years as countries strive to meet obligations under the Paris climate agreement.
"as climate change becomes an everyday reality, reinforced by social pressure, and solutions with low carbon emissions is cheaper, it is highly unlikely that governments will be allowed to correct itself ... This creates a huge threat for your assets and for the wider system," said Executive Director of PRI, Fiona Reynolds.
the report stated that the most vulnerable sector is fossil fuel, which could lose a third of its current value. The report predicts a drop in the capitalization of the coal industry at 44% and oil and gas sector, 31% in 2027.
the report States that there will be industries that will benefit from climate change is primarily the car manufacturers who have invested heavily in electric vehicles and the firms involved in the supply and use low carbon energy.
These companies may grow more than two times of current value.
