Climate Change Crisis Stock Deals
As we enter into the second half of the year, the climate change crisis has been brought to the forefront again. This time, it has reached the point where the financial stability of companies listed on stock exchanges is at risk. In order to address this issue, the CDSB is drafting new rules that will require companies to prove their resilience to the threat of climate change.
The Climate Change Crisis Real Impact I Acquisition Corporation (CLII) is a publicly traded special purpose acquisition company that announced the previous announcement of its business combination with EVgo Services LLC. This combined company will trade under the ticker symbol "EVGO."
CLII's definitive proxy statement was filed with the Securities and Exchange Commission (SEC) on March 21, 2019. It describes a few of CLII's proposed business combinations with EVgo. A special meeting of the company's stockholders has been scheduled for April 25, 2019.
The proposed business combination is the first of its kind in the electric vehicle charging industry, and has received approval from the boards of both companies. Although the transaction has not yet closed, it is expected to be completed in the second quarter of 2021.
EVgo is the nation's largest public fast charging network for EVs. It operates 800 locations in 65 metropolitan areas across 34 states. These locations provide a convenient charging experience near where drivers live, work, or play. It is powered by 100 percent renewable electricity, and has partnerships with automakers and rideshare operators.
SolarEdge Technologies (SEDG) is an Israeli solar technology company. The firm's primary products are power optimizer systems, which attach to solar panels to increase the electrical output of the array. In addition, the company offers smart energy devices and storage solutions. Founded in Herzliya, Israel, SEDG has offices in the US and Japan.
With strong market momentum in Europe, SolarEdge's revenue grew 52% in Q3 compared to last year's quarter. However, it missed Street estimates for fourth-quarter revenue. This led to a drop in margins.
The company's commercial product mix is expected to grow. It will also focus on utility-scale solar deployments. Moreover, the company's grid service units are expected to provide new growth opportunities.
As a result of low oil prices and an increase in the global focus on climate change, several countries are developing incentives to encourage the adoption of renewable energy sources. These include Germany, Japan, and the United States.
CDSB drafts requirements for companies listed on stock exchanges
The Climate Disclosure Standards Board (CDSB) has launched a new initiative to accelerate the development of robust climate change related information. As part of its efforts, the CDSB is drafting requirements for companies that list on stock exchanges.
One of the first requirements for companies that are listed on a stock exchange is to develop a plan to reduce greenhouse gas emissions. According to the CDSB, the reason for this is to encourage companies to be more transparent in reporting their environmental information to investors.
In addition to developing a plan, all public companies should disclose transition risks and physical risks associated with climate change. This includes both direct and facilitated emissions. For example, insurers are required to disclose the amount of financed emissions.
In the realm of financial disclosure, the CDSB is also proposing a series of recommendations that should help to inform investors about climate change. It will be releasing a guide in the near future to highlight the key metrics for these types of disclosures.
Financial stability implications of climate change physical risk
Climate change physical risks represent an increasingly important risk to the financial system. These risks can affect asset prices across sectors, and they can alter the resilience of the global financial system. They also amplify credit, liquidity, and counterparty risks. The FSB has established a Task Force on Climate-related Financial Disclosures, which aims to improve climate-related financial reporting.
Climate-related physical risks increase financial burdens on states, localities, and federal governments. Some costs are immediate, while others are long-term. For example, damage to commercial real estate and mortgages, agricultural loans, and derivative instruments tied to these markets are all susceptible to severe weather events.
Financial regulatory safeguards can limit the severity of destabilizing crises. They can also help provide fiscal space during weather shocks. However, the financial system is prone to vulnerabilities even when markets are fully transparent. Developing comprehensive accounting, reporting, and risk modelling methodologies can take years.
Many banks include climate considerations in sector exclusion policies. This allows them to better assess the risks of specific sectors.