Company valuations and climate strategies are poles apart.

Company valuations and climate strategies are poles apart.

“Analyses of companies globally by management consultancy Kearney in November seen exclusively by Reuters, as well as data by Credit Suisse Group AG published in April, found that companies that lowered their emissions in sectors where doing so was expensive and government regulation was limited were valued less, on average, than more emitting peers.”

[COMMENTARY]There’s a vicious or virtuous circle that’s happening — depending on your viewpoint — as regard to fossil-fuel prices. High prices please many investors! Hence, companies fully engaged in fossil fuel production are reaping big profits. Environmentalists love it too as it dampens fossil-fuel demand. However, consumers are mad about it.

For many investors and fund managers, it’s a bit like why not invest in tobacco companies? They usually make huge profits, often have great ESG ratings, and are included in many ESG indices and ESG funds? You see my point!

Also, its increasingly difficult to find funding for fossil-fuel developments thus limiting potential future supply. So, many investors see investing in ‘purer’ fossil-fuel plays as a win-win-win! Similarly, in many industry sectors.
Company valuations and climate strategies are poles apart, by Elizabeth Howcroft and Simon Jessop, November 24, 2021, Yahoo! Finance, USA.

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