Podcast 4th December 2015
The on going climate change talks in Paris is gaining a lot of significance as the whole world now believes that global warming is for real. Many parts of the world have been affected by global warming with coastlines eroding and natural disasters such as floods and drought becoming more frequent. The rains in Chennai that has disrupted the whole city and many parts of the state of Tamil Nadu over the last few days is seen as caused by global warming. A world that gets hotter by 2 degrees is seen as catastrophic.
Climate change talks call for reduction in greenhouse gas emissions, investments in renewable energy, innovation in power generation, increase in tree cover, protection of wetlands and many other environmental protection laws. Needless to say if the world as one agrees on lowering global warming, then lifestyle and consumption patterns will have to change.
The climate change talks will have an effect on your investments as well. Money will go out of polluting industries to green technology. Renewable energy such as wind and solar, storage of this energy and innovations in technology to lower costs of renewable energy will gain traction at the cost of oil and coal production. You will have to think many times before venturing into investments in polluting industries.
Environmental norms will become tougher and industries such as Chemicals will face the brunt of the tough laws. Activism will force large investors such as pension funds to shun industries that cause damage to both environment and health. Industries such as tobacco will see less investments going forward.
Climate change can also affect value of real estate. Natural disasters take a toll in places where there has been unfettered constructing activity. Chennai floods are a prime example of poor urban planning and flouting of environmental laws. Lakes were reclaimed for construction, wetlands were destructed and trees were cut down. Real estate prices in Chennai had shot up on speculation and now with floods showing the vulnerability of the city, there will be a fall in interest in real estate in Chennai.
Similarly other parts of the world that are vulnerable to climate change will see value of land fall on fears of destructing due to natural calamities.
Climate change should play a large factor in your investment decisions. When making an investment think about potential threats from climate change and look for investments that will protect you from climate change.
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