Companies that fail to curb their carbon output may eventually face the consequences of asset devaluation and stock price depreciation, according to a new study out of the University of Waterloo.
Companies that fail to curb their carbon output may eventually face the consequences of asset devaluation and stock price depreciation, according to a new study out of the University of Waterloo.
The researchers further determined that the failure of companies within the emission-intensive sector to take carbon reduction actions could start negatively impacting the general stock market in as little as 10 years’ time.
"Over the long-term, companies from the carbon-intensive sectors that fail to take proper recognizable emission abatements may be expected to experience fundamental devaluations in their stocks when the climate change risk gets priced correctly by the market,” said lead author Mingyu Fang, a PhD candidate in Waterloo’s Department of Statistics & Actuarial Science. “More specifically for the traditional energy sector, such devaluation will likely start from their oil reserves being stranded by stricter environmental regulations as part of a sustainable, global effort to mitigate the effects caused by climate change.
“Those companies may find that large portions of the reserves are at risk of being unexploitable for potential economic gains.”
Read more at University of Waterloo
Image: An iceberg floats past an ice shelf in the North Atlantic. (Photo Credit: U.S. Coast Guard Photo)
