“Climate change forces investors to act“
In spite of the Trump administration’s apparently benevolent stance towards fossil fuel companies, the persisting “carbon bubble” continues to pose a risk to capital markets, Markus Frühauf writes in Frankfurter Allgemeine Zeitung (FAZ). According to a study conducted by German fund manager Feri together with environmental organisation WWF, a resolute implementation of the Paris Agreement’s climate protection targets could force investors to reconsider their stakes in companies dealing in oil, natural gas and coal, he explains. “The cogwheels of regulation with respect to climate protection are beginning to interlock on capital markets,” Feri’s founder Heinz-Werner Rapp told FAZ. The carbon bubble’s threat was still “considerably underestimated especially by German investors,” the study said. But since several countries, such as France, the Netherlands and the Scandinavian countries, were starting to make a disclosure of climate risks in investment portfolios compulsory, many stocks could face “a devaluation of 40 to 50 percent,” Rapp warns. Feri points at the example of German utilities E.ON and RWE, which in the course of the Energiewende experienced a major drop in value.
For background, read the CLEW dossier Utilities and the energy transition.