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18 December 2019 By George Hay, Antony Currie Follow @gfhay

Businesses slow to react to the impact of climate change have so far got off lightly. In 2020, investors will broaden their activism and target passive funds, too. Meanwhile, some governments may impose stricter measures, and more valuation clarity will wake up short sellers.

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Government policies designed to meet the threat of climate change could permanently wipe between 3.1% and 4.5%, or $1.6 trillion to $2.3 trillion, off the stock market value of companies in the MSCI All Country World Index depending on when they are introduced, according to economic analysis published on Dec. 9.

The research, by Vivid Economics and Energy Transition Advisors for the United Nations-supported Principles for Responsible Investment, projected that the 100 worst-performing companies in the MSCI ACWI would lose 43% of their current value, while the 100 best performers would gain 33%.

The value of automakers with the highest investments in electric vehicles would increase by 108%, while that of the world’s largest listed coal companies would fall 44%. The 10 largest companies in the integrated oil and gas exploration and production sector would lose 31% of their current value, or $500 billion.

Electric utilities with the strongest strategy for renewables could double in value, with laggards falling by two-thirds. Miners producing minerals critical for the transition could enjoy 54% upside, while those with the smallest share of green minerals could lose half their market worth.

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