Bloomberg News

Company Profits Unaffected by Climate Change Laws: Poll

September 07, 2012

Company Profits Unaffected by Climate Change Laws in Global Poll

The Petermann Glacier is a river of ice in northern Greenland that opens into the Arctic Ocean. A large iceberg broke free on July 16 and began its drift down the fjord. A NASA satellite on July 21 captured this image of the iceberg, which covers an area of more than 46 square miles. Photographer: Jesse Allen and Robert Simmon/NASA Earth Observatory

Almost 50 percent of global investors in a survey said government efforts to combat climate change will have little effect on corporate profits, while most say global warming is a danger to the planet.

Actions to limit pollution will have “not much impact” on profitability, according to 49 percent of respondents in the Bloomberg Global Poll, while a third said profit may fall. Eight percent of the investors, analysts and traders surveyed among Bloomberg’s global customers said such efforts would have a positive impact on corporate profitability in their nation.

Overall, 38 percent of investors said climate change was a major threat to the environment, down from 48 percent in July 2009. Forty percent called it a minor threat in the most recent poll and 19 percent said warming presents no real threat.

“Business must realize that without some form of socially responsible behavior with regard to concerns over the environment, very high costs will fall upon society eventually,” John O’Connell, chief executive officer of the Toronto-based investment firm Davis Rea Ltd., said in an e-mail. “I do not see a major impact on profitability.”

Measures to control heat-trapping gases from power plants and factories vary by nation. The U.S. never ratified the Kyoto Protocol, an international agreement adopted in 1997 that aims to limit greenhouse gases from industrial nations. The European Union has set a target of cutting the emissions in its nations by 20 percent in 2020 from 1990 levels.

EPA Rules

In the U.S., Congress in 2010 rejected legislation backed by President Barack Obama to create a cap-and-trade system in which companies would buy and sell a shrinking number of allowances to emit gases that add to climate change. The Environmental Protection Agency’s rules to cut greenhouse-gas emissions, issued after Congress’s action, are being challenged in court.

When asked to predict the effects of climate-change actions, 37 percent cited an adverse impact on corporate profitability. In the U.S., 48 percent foresee falling profit, exceeding the 31 percent in Europe and 29 percent in Asia.

Rick Arnold, a bond broker at Toronto-based Shorcan Brokers Ltd., said climate policies in Ontario have raised energy costs while doing little to curb emissions.

“I do not believe that man is warming the planet through greenhouse emissions, but regardless, all government programs do nothing to decrease carbon,’ Arnold said in an e-mail. ‘‘It is just a tax that will impact businesses and consumers.’’

The survey of 847 Bloomberg customers was conducted Sept. 4.

Climate Scientists

The American Meteorological Society, a Boston-based group that promotes education about the atmosphere, echoed the views of a majority of climate scientists in an Aug. 20 statement that said the dominant cause of warming in the last 50 years is man- made pollution.

Without further action to lower emissions of heat-trapping gases, the planet is set to warm by 2.6 degrees to 4.1 degrees Celsius, Climate Action Tracker, a project run by three European research groups, said this week. That would exceed the 2-degrees Celsius (3.6 degrees Fahrenheit) ceiling that UN envoys have set as a global goal.

O’Connell was among the 78 percent of respondents who called climate change either a major or minor threat. Still he remains skeptical of government programs to tax carbon fuels or to allow polluters to trade carbon credits.

‘‘Further investigation into the costs, benefits and unintended consequences of these controversial policies should be pursued,’’ O’Connell said. ‘‘Who pays for pollution and how do you allocate those costs along the food chain is a highly complicated question.’’

U.S. Concerns

There is less concern in the U.S. about the threat of climate change, where 26 percent said it wasn’t a threat compared to 16 percent in Europe and 13 percent in Asia.

In a move to curb emissions that doesn’t need approval from Congress, the Obama administration has required automakers to double by 2025 the average fuel economy of passenger vehicles sold in the U.S. Kim Caughey Forrest, an analyst at Fort Pitt Capital Group Inc., in Pittsburgh, who was among the 19 percent that believe climate change represents no real threat, said the policy will limit choices for consumers and compromise safety.

‘‘The move to smaller more efficient cars will happen as gas prices rise,” Caughey said in an e-mail. “We saw this happen in the past few years. I don’t know if the market needs the artificial incentives.”

The Bloomberg Global Poll was conducted by Selzer & Co., a Des Moines, Iowa-based firm. It has a margin of error of plus or minus 3.4 percentage points.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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