Your Portfolio Returns and Climate Change
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Next month we will be celebrating World Environment Day on 5th June. While the theme this year is Biodiversity, Covid-19 and Carbon will no doubt remain topical. Covid-19 and Carbon overload (resulting in climate change) are similar in that they are now both Known Unknowns. We know they exist but their eventual impact and damage is still Unknown. However, they are also different, in that Covid-19 arrived unannounced with no one ready for it. Carbon overload on the other hand is well known and has been around, we just consider it a problem beyond our personal, professional and portfolio time horizon. A potentially expensive mistake indeed.
Today, in the spirit of the upcoming World Environment Day, I will highlight why carbon is important for companies and portfolios. I will also share one tool that we use when assessing our companies and portfolio’s financial vulnerability to this risk. That is – Carbon Adjusted Financials.
