Almost half of global investors say government efforts to combat climate change will have little effect on corporate profits, while most say global warming is a danger to the planet, according to a recent survey.
“Business must realize that without some form of socially responsible behavior with regard to concerns over the environment, very high costs will fall upon society eventually," John O’Connell, chief executive officer of the Toronto-based investment firm Davis Rea Ltd., said in an email. “I do not see a major impact on profitability."
Measures to control heat-trapping gases from power plants and factories vary by nation. The United States never ratified the Kyoto Protocol, an international agreement adopted in 1997 that aims to limit greenhouse gases from industrial nations. The European Union has set a target of cutting the emissions in its nations by 20 percent in 2020 from 1990 levels.
Actions to limit pollution will have “not much impact" on profitability, according to 49 percent of respondents in the Bloomberg Global Poll, while a third said profit may fall. Eight percent of the investors, analysts and traders surveyed among Bloomberg’s global customers said such efforts would have a positive impact on corporate profitability in their nation.
When asked to predict the effects of climate-change actions, 37 percent cited an adverse impact on corporate profitability. In the U.S., 48 percent foresee falling profit, exceeding the 31 percent in Europe and 29 percent in Asia.
Rick Arnold, a bond broker at Toronto-based Shorcan Brokers Ltd., said climate policies in Ontario have raised energy costs while doing little to curb emissions. “I do not believe that man is warming the planet through greenhouse emissions, but regardless, all government programs do nothing to decrease carbon,’ Arnold said in an email. ‘’It is just a tax that will impact businesses and consumers.’’
O’Connell, the investor, was among the 78 percent of respondents who called climate change either a major or minor threat. Still, he remains skeptical of government programs to tax carbon fuels or to allow polluters to trade carbon credits.
‘’Further investigation into the costs, benefits and unintended consequences of these controversial policies should be pursued,’’ O’Connell said. ‘’Who pays for pollution and how do you allocate those costs along the food chain is a highly complicated question.’’
There is less concern in the U.S. about the threat of climate change, where 26 percent said it wasn’t a threat, compared with 16 percent in Europe and 13 percent in Asia.
In a move to curb emissions that doesn’t need approval from Congress, the Obama administration has required automakers to double by 2025 the average fuel economy of passenger vehicles sold in the U.S. Kim Caughey Forrest, an analyst at Fort Pitt Capital Group Inc. in Pittsburgh, who was among the 19 percent that believe climate change represents no real threat, said the policy will limit choices for consumers and compromise safety. ‘’The move to smaller more efficient cars will happen as gas prices rise," Caughey said in an email. “We saw this happen in the past few years. I don’t know if the market needs the artificial incentives."