In this episode, Deutsche Bank used artificial intelligence to detect whether being environmentally aware affects a company’s financial performances. It turned out that over the last 12 years, MSCI World Index companies that experienced more positive climate change news published about them outperformed the index average. Furthermore, investors, it seems, are more conscious of bad climate change news when markets are growing, but less so when they’re falling. Additionally, technology and consumer staples were more vulnerable to this ‘environmental factor’ than the power and utility sectors. According to another survey on consumers, more people recognised their personal responsibilities in regard to climate change and those who prioritise cost and those who prioritise quality are equally likely to take climate changes into account when purchasing. Finally, DB argued that environmental issues would remain in public minds for longer, so it was critical for companies to display their environmental awareness to different demographics.
Why does this matter? With Greta Thunberg kicking up a storm at the UN climate change summit, this timely podcast shows how markets may reward greater sensitivity to the subject .Also, there is more evidence that consumers are increasingly aware of the ecologic consequences of their purchases.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
For access to our Slack Chat Room, where we discuss all things markets with our researchers and subscribers