Paris conference success essential for world’s climate and investor portfolios
High-polluting sectors are expected to pour money into upgrading operations and cutting emissions
As foul air drive Beijing residents indoors and world leaders meet in Paris to talk climate change, the threat of further man-made environmental destruction, and the potential to reverse it, are already starting to weigh on investment portfolios.
That adjustment in investor outlook will be driven by the trillions of US dollars in clean-tech investment analysts expect will be spent in the decades ahead as governments grapple with the impact of off-kilter weather patterns and rising sea levels on food supplies and low-lying residential areas.
Asset prices will also be affected by mooted changes to how companies curb their carbon output with high-polluting sectors like autos, pulp and paper, and utilities, among others, all expected to pour money into upgrading operations and cutting emissions.
And in certain sectors like mining, investors are already voting with their portfolio account, divesting more than US$2.6 trillion from fossil fuel companies as of September this year, according to Arabella Advisors.
Investors are becoming an increasingly important actor in ensuring the success of the transition to a low-carbon economy and avoiding stranded-asset risk
“Without action, the global mean cost of climate change could rise to 1 per cent to 5 per cent of gross domestic product per year – with emerging markets and the poor to be hit hardest,” Bank of America Merrill Lynch strategist Sarbjit Nahal and his colleagues wrote recently, adding that global weather-related losses had already averaged US$200 billion a year over the past decade, .