Companies drag their heels on climate change because many managers believe that for the planet to win, profits must fall. And others don’t see the relevance to their customers. Evidence from stock market returns and Deutsche Bank research into shifts in customer purchase habits indicates otherwise, note Deutsche Bank’s Corporate Bank Focus Research team
In September 2019 Greta Thunberg, a 16-year-old Swedish schoolgirl addressed the UN Climate Action Summit in September 2019 with the stark accusation, “Entire ecosystems are collapsing. We are in the beginning of a mass extinction. And all you can talk about is money and fairy tales of eternal economic growth. How dare you!”
Having arrived from Sweden in a solar powered yacht to make the point that air travel was doing the environment no favours, air travel of that summer of 2019 was set to be suppressed as the extinction rebellion notched up headlines and environmental policies became more prominent in political campaigning.
Voice of data
Corporate and consumer behaviour determines how successful the planet’s current occupants are at pulling back from the tipping points – the points at which climate change cannot be reversed. The World Economic Forum helpfully reminds us what they are in the article “Four climate tipping points the planet is facing”1. In the spirit of optimism that continued efforts to change behaviour should be highlighted as it actually does connect with revenue and economic growth, Deutsche Bank’s Corporate Bank Focus Research team decided to take a closer look at what stock market returns and actual customer purchasing decisions were adding to the climate change discussion.
“We all remember how BP’s share price halved during Deepwater, but what about the smaller pieces of news that came out? Do they have an impact on share prices?” Deutsche Bank Analyst Luke Templeman, explains in his Podzept podcast, “Climate change and corporates” (20 September 2019) how the team set about finding out.