Scared off by corporate accounting scandals and a year of bad economic indicators, big investors are starting to keep an eye out for other possible financial red flags — and the hidden risks associated with global warming are high on their lists. As increasing temperatures trigger environmental changes ranging from drought to rising sea levels, investors are growing wise to the possibility that they could end up footing part of the bill. One large German insurance company has estimated that global warming could cost $300 billion annually by 2050, a toll that would be exacted in weather damage, pollution, industrial and agriculture losses, and other expenses — including the cost of compliance with future regulations, fines, taxes, and caps on polluting products. The industries likely to take the heaviest hit are oil, gas, and utilities, which will be directly affected by changes in energy policy, and real estate, which stands to suffer the most from coastal flooding and drought.
