Environment
Climate change will impact balance sheet
Projected legislation means investors in Canadian firms
will soon have to recognise carbon liabilities as part of the balance sheet,
according to a report by investment bank
CIBC World Markets. CIBC predicted legislation to cut greenhouse gas (GHG)
emissions will have a direct on impact on firms making up 40% of the
Toronto Stock Exchange’s market value.
Further, the report argues the majority of these firms will be adversely
affected by the introduction of an emissions cap and trading system.
Jeff Rubin, CIBC chief strategist, pointed to efforts by US
states such as California in introducing caps on GHG emissions, and noted that
Canada has generally followed US environmental initiatives at both provincial
and federal level.
CIBC has set up a carbon cap composite vulnerability index
designed to calculate an overall assessment of carbon risk. The index is based
on a weighted average of four measures of carbon vulnerability: emission
intensity, energy intensity, ability to pass along costs, and abatement scope.
Coal fired utilities rank potentially highest on the index, followed by oil
sands producers.
Links
CIBC World Markets
Toronto Stock Exchange March 2007 |
