WWF is working with financial institutions to develop more appropriate financing packages for renewable energy projects and technologies.
Already financial institutions have implemented strategies to switch their investments to a much lower carbon intensity portfolio, and have begun to review how companies plan for the impacts of climate policy on their core business.
The benefit for investors
From an investor's perspective, the question of how prepared companies are for the shift to a world in which carbon emissions become costly is crucial. Companies that do not take these new policies into account are more likely to make erroneous decisions and reduce returns to investors.
Investing in a new coal power station, for example, would assume that penalties for carbon dioxide (CO2) emissions will stay low and that other, less carbon-intensive fuels (e.g. gas, renewables) will not become profitable alternatives. However, climate policy is now increasing the cost burden of CO2 emissions and, hence, the cost of fossil fuel-based power generation.
Investors need to be aware of how the companies in which they invest are facing up to this new challenge, and engage with them to ensure that they are making sufficient allowance for the cost of carbon.