What are Carbon Asset Risks?
Don’t let the complex relationship between climate change, business and investment puzzle you…
In our previous post, we discussed the relationship between climate change and investment. This relationship is not always the easiest to decipher. In fact, there is at least one very common myth that has many people fooled.
Myth: The physical impacts of climate change are the primary climate-related risks to investments.
Although the physical risks of climate change are serious (and should be taken seriously by investors), they are not the sole climate-related concerns to keep in mind. There are non-physical concerns or financial risks which have been given the label, carbon risks. These carbon risks can affect four different sectors that investors cannot ignore prior to investing: government regulation; economic markets; technology; and public opinion.
Depending on their industries as well as their abilities to adapt, businesses may face challenges in any or all of these different sectors that feel the effects of climate change. When carbon risks may potentially lead to negative financial returns for investors, businesses and lenders, these become “carbon asset risks.”
Discover more about carbon asset risks from the World Resources Institute. Give your business a leg up with help from Legend Power Systems! Find out how we can help you reduce your carbon asset risks and appeal to future investors, all the while saving you money and contributing to low carbon future!
(Image via Pixabay)