Can Climate Change Really Impact Your Investments?
Climate change is in the news nearly every day in one form or another: political commentary, environmental activist movements, global warming – even business news. But how could that possibly impact stock values and your investment choices?
Whether or not you agree with the science and politics surrounding global warming and climate change, you need to be aware of how countries and companies around the world are reacting to these conditions and the multitude of solutions that are being advanced:
US companies are being provided with incentives to reduce fossil fuel utilization through legislation that controls factory emissions and even penalizes the continued use of high-carbon fuels such as coal. Alternative sources of energy such as solar power and wind generators are rewarded with special consideration in the form of research grants, tax incentives, and subsidies.
Other countries have similar initiatives underway to reduce emissions to control climate change as agreed by the European Union at December’s Paris meetings that included nearly 200 countries. Developed nations agreed to focus on protecting society from climate change and also committed to assisting developing countries in their efforts to avoid accelerating the problem.
What do These Climate Change Initiatives Mean to my Investments?
There are direct correlations between these efforts and some companies’ profitability and possibly even longevity. Coal companies are just one example of an industry that is essentially being forced out of existence in some industrialized countries that are suffering from high levels of pollutants. Subsequently those businesses or utilities such as power plants that rely on coal for their very existence are faced with costly transformation to alternative fuels or sources of power.
This means your investments may be adversely impacted if they are based on:
- Fossil fuel sources that are negatively impacted by legislation and monitoring requirements
- Mining industries that could face increased restrictions and penalties along with reduced demand
- Business that may encounter considerable expense through the need to upgrade their operations to conform to new environmental restrictions
On the other side of the investment coin are those companies and stocks that may benefit considerably from agreements to reduce emissions and limit global warming and climate change:
- Research enterprises investigating such alternatives as solar power and wind turbines
- Companies already manufacturing and constructing alternative solutions
- Automotive manufacturers providing highly-efficient battery powered vehicles or hybrid operation that reduces the owner’s ‘carbon footprint’.
- Manufacturers of emissions reducing equipment for industry such as air ‘scrubbers’ and filtering equipment.
How do you benefit from Climate Change in your Investments?
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Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.