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Climate change is not only an environmental but to a large extent also an economic issue. It is all the more surprising that the related risks currently do not play a role in company analysis. In a detailed study the analysts of WestLB Panmure for the first time looked into the question of possible reductions in share valuations for companies operating in sectors with a high climate exposure. Based on economic model calculations, the analysts arrived at a risk potential (market value at risk) of between US$ 200 billion and US$ 900 billion for the equity markets worldwide.

Pressure will grow on companies in the future to concern themselves with this issue. This is indicated, among other things, by the entering into force of the Kyoto Protocol, the introduction of emission trading systems, the emergence of extreme weather conditions and the high costs involved as well as the growing risk of actions for recovering damages. For companies it is a question of limiting the resulting risks and viewing the issue as an opportunity to distinguish themselves from their competitors. The risk potential of individual sectors differs widely in some cases. The market value at risk is especially significant in the automobile, energy, healthcare and utilities sectors.

In the highly regulation-prone automobile sector, the majority of manufacturers are clearly aware of their exposure and invest large sums in the development of new power propulsion systems. All companies prefer a mixture of different technologies, but focus on different aspects. BMW, for example, is the only company which is working on a hydrogen combustion engine and has already made initial market experiences in this field. WestLB Panmure´s experts have identified weaknesses in fuel cell technology at Fiat and VW. The hybrid electrical power system is currently only offered in the market by Fiat. DaimlerChrysler is also at a relatively advanced stage of development in this area.