What's going on?
According to a report out on Tuesday, the effects of climate change could cost 215 of the world’s biggest companies a combined $1 trillion (tweet this).
What does this mean?
The Carbon Disclosure Project (CDP), which published the report, is a UK-based charity aiming to encourage companies and countries alike to better consider and disclose their effects on the environment. So, with some skin in the climate change game, its findings may be taken with a pinch of salt by some investors.
CDP surveyed nearly 7,000 companies – and 215 of the biggest anticipated climate change could cost them some $970 billion. Companies said higher temperatures and unpredictable weather could decrease their output – and rising costs of carbon emissions may lower their profits. However, these companies also anticipated $2 trillion worth of opportunities (i.e. double the likely costs) partly thanks to wider use of electric vehicles and clean energy sources.
Why should I care?
The bigger picture: Companies warm to investors.
Most companies have an interest in suggesting the positive financial impacts of climate change outweigh any potential negatives – saying otherwise could cause investors to anticipate falling profits and sell their stocks. And being positive’s made all the easier by the real costs of climate change being largely unknown, complicated, and therefore hard to predict. Even surveyed oil companies – whose current businesses are being increasingly challenged by renewable energy sources – were upbeat. Though that might be explained by some already making environmentally friendlier deals.
For you personally: Environmentally friendly investing is lit.
As the effects of climate change confront stock market investors, environmentally friendly investment options are rising in popularity. And as more than $30 trillion is expected to enter the hands of eco-conscious US millennials over the coming decades, the demand for environmentally considerate investment funds may soar.