Financial Crisis Triggers Climate Change Shake-Out

Published: 15 October 2008

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12 pages, 4 figures

Executive Summary

The financial crisis will trigger a recession in developed economies which has negative implications for the climate change sector. The epicentre of the financial crisis is property, banking and consumer markets — none of which directly impact spending on climate change. But nobody escapes the effects of a recession. CFOs will block discretionary spend on voluntary offsets, CEOs will stall climate strategy development, investors will avoid high risk propositions and policy-makers will water down costly climate change plans. Despite the turmoil the climate change sector will continue to grow in 2009 due to its distance from the most affected markets, support from compliance drivers, alignment with cost savings programs and equity-funded business models.

FINANCIAL CRISIS WILL HIT THE CLIMATE CHANGE SECTOR

Flat Or Negative GDP Growth
Crisis In The Banking Sector
Commercial Banks Unwilling To Lend
Investors Seeking Safe Havens For Their Cash
Huge Wealth Destruction Through Asset Price Falls
A Cyclical Fall In Corporate Profitability
High Inflation Driven By Commodity Prices

Financial Crisis Hits Property, Debt, Banks And Consumer Markets

Countries With A Property Asset Price Bubble
Property Value Chain
Financial Services
Consumer Markets

Nobody Escapes: There Are Negatives For The Climate Change Sector

CFOs Will Block Discretionay Spend On Climate Change
CEOs Will Postpone Climate Change Strategy Development
Investors Will Avoid High Risk Propositions
Policy-Makers Will De-Prioritize Climate Change
Compliance Buyers Will Wait For Lower Carbon Prices
Voluntary Offset Buyers Will Decline

DESPITE TURMOIL, CLIMATE CHANGE SECTOR WILL GROW IN 2009

Separation From The Epicentre
Support From Compliance Requirements
Alignment With Cost Savings Programs
Equity-Funded Not Debt-Funded Business Models

The Climate Change Sector Will Power Back In 2010

Reduce Policy Uncertainty
Proven Benefits Of Climate Change Strategy
Financial Bite From Climate Change Regulations
Cash Rich Investors Looking For A New Investment Theme
Renewed Consumer And Media Interest

TABLE OF FIGURES

Figure 1. The Financial Crisis Is Severe And Global
Figure 2. How Executive Behaviour Will Impact The Climate Change Sector
Figure 3. How Investor Behaviour Will Impact The Climate Change Sector
Figure 4. Carbon Trading Volumes Continue To Grow Through The Crisis