Oil producers and companies in carbon-intensive industries ‘will lose half their value within ten years’ The world’s largest coal firms could shed 44% of their value alone, says the PRI, while the 10 biggest oil and gas firms may lose 31%

The world’s biggest oil and gas, mining and heavy industry companies will lose almost half of their value in the next decade as more laws are brought into place to tackle climate change, a report warns.

The UN-backed Principles for Responsible Investment (PRI) warns that carbon-intensive firms could lose 43 per cent of their market value should regulation tighten, while the most progressive companies could see a gain of 33 per cent.

The analysis, carried out for the PRI by Vivid Economics, considers what the “inevitable policy response” to the climate emergency could be on a global scale and projects the impact that resulting policies would have on business.

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It picks out oil and gas firms, as well as those in the coal, building materials, cattle, soy, automaking and metals and mining sectors, as those most likely to lose value in the next decade.

The world’s largest coal firms could shed 44 per cent of their value alone, says the PRI, while the 10 biggest oil and gas firms may lose 31 per cent.

Opportunities in sustainability

But the report also suggests that firms which act rapidly to make the most of a transition to a low-carbon economy could boost their prospects.

These firms include carmakers, with those that pivot to producing electric vehicles likely to increase in value by 108 per cent, the PRI says. Energy firms that have the best strategies to provide renewable sources could grow 104 per cent.

The agricultural sector could be transformed significantly, the report suggests, while companies which use “sustainable” biofuels and non-beef protein sources could grow by 10 per cent.

Those exposed to under-pressure assets such as forestry could lose as much as 43 per cent of value.

‘Under-pricing climate transition risk’

Fiona Reynolds, CEO of the PRI, said: “This analysis underscores the extent to which markets are under-pricing climate transition risk. One in five of the world’s most valuable companies are impacted by at least 10 per cent in either direction.

“While the market-level effects of an abrupt policy response to climate change may appear manageable, this masks a much more complex and significant story, with some huge winners and losers emerging between sectors and within them.”

A spokesperson for the Society of Motor Manufacturers and Traders said: “Vehicle manufacturers and suppliers are investing vast sums in ultra-low and zero emission vehicles to help meet the same environmental goals.”

National Farmers’ Union President Minette Batters said: “British farmers are passionate about producing climate-friendly food. This year the NFU outlined its ambition for British agriculture to reach net zero by 2040, 10 years ahead of the government’s target.

“Focusing on three key pillars of improving productive efficiency, increasing carbon capture and storage and boosting renewable energy production, our net zero plans offer huge opportunities for farmers to restructure and diversify their businesses to bring more value back to the farm gate at the same time as delivering sustainable food which we know is important to the British public.”