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Climate change has the potential to have far reaching impacts on business, the economy and society. As the impacts emerge and there are economic and regulatory responses by government to minimise the threats - company and investor decisions will be increasingly affected.
Background
Company value and investor support will be influenced by the impacts of more intense weather events (drought, storm), loss of market and regulatory action that advantages some products and disadvantages others. As carbon becomes a central concern in the pricing of resources and products the environmental externalities of the marketplace become a factor in business and investor decisions. Fossil fuel power is less attractive; some agriculture becomes more marginal and unsustainable; extreme weather influences insurance premiums; and tourism may see natural assets, such as coral reefs, severely degraded.
Climate Change and Company Value (AMP, Baker & MacKenzie, TEC)
The Investors Group on Climate Change (Aust)
The Debate
While the existence and impact of climate change caused by pollution is becoming increasingly accepted, debate about what action to take is still controversial. Key business sectors seek to avoid direct regulation, preferring voluntary measures; others want indemnities from the economic impacts of emissions trading schemes. Environment groups are pressing for strong regulation; new economic instruments to ensure the cost of carbon is included in business and consumer decisions; industry restructuring; and diversion of investment funds to green products and services.
TEC Position
TEC has been active in developing proposals for emissions trading schemes and working with business and institutional investors to explore impacts and alternatives. Our Climate Risk and Investors Project is assisting financial analysts to come to grips with the issue.
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