Climate Change Will Make Some Companies Extremely Rich—but Which Ones?

A warming planet is the surest bet on earth. The right idea to fight it -- or prepare to live in it -- is an unbeatable long-range investment

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AP Photo/Mark Lennihan

Large-scale mayhem has produced some of history's great fortunes: war, for example, but also the disruptive industrial, digital and--more recently--financial revolutions: A lot of people have become rich, others ruined.

Which brings us to climate change. Over the last couple of weeks, the Central Intelligence Agency, the International Energy Agency and the World Bank have released separate dire warnings for civilization should global temperatures rise as scientists now predict they will. Echoing scenarios laid out previously by the US military, the United Nations and think tanks, the new reports forecast the weakening of nations, the migration of populations and rampant disease. Populous places could flood, and others become unsurvivably hot and dry. War could break out over the right to fertile places.

But such awkwardness aside, the end-of-life-as-we-know-it scenario would seem to be an exceptional opportunity in the classic chaos-boom matrix--and an unbeatable long-range investment. China could implode, gold prices could crater, Apple could become a technology also-ran, but there's probably no surer bet than a warming planet.

Some businesses have already responded. Around the world, we see carmakers churning out low- and no-emission electric cars in California, China and elsewhere, and other companies pouring billions of dollars into wind and other investments. These are essentially one-way bets--they attempt to shave off the impact of climate change.

We also have some signs of shrewd CEOs in the energy sector hedging more broadly. As the Arctic ice-cap melts, ExxonMobil, Statoil and Total are frantically seeking deals along newly accessible oil and gas fields, particularly in Russia and Greenland.

But we are talking even broader. What happens if massive drought strikes swaths of Africa, the Indian subcontinent and the US southwest? What if the seas swallow island nations and compel trillions of dollars in investment to preclude the flooding of cities where much of the world's population lives? What if Canada and Russia become magnets of global migration, since a warmer world could favor their water- and agriculture-rich reaches? It is the fleet-footed buccaneer who typically capitalizes on such disorder. But couldn't and shouldn't the astute, far-seeing corporate strategist position a business to profitably respond to these and other climate-led emergencies?

WHERE OPPORTUNITIES LIE

"Sustainability," the buzzword for attempts to reduce carbon emissions, comprises much of the climate-change industry. Climate-change consulting, for example, is already a $1.9 billion a year business, and is expected to grow. But if, as scientists think, at least some of the impact is already irreversible, then reducing emissions is only a small part of the opportunity. The rest of it is in new businesses that understand and can profit from the impacts.

In a report last year, New York-based Mercer said climate change is negative for real-estate investment in low-lying and coastal areas like Bangkok, New Orleans and Shanghai. Land in currently cool and water-rich nations, though, will boom. So smart investors will abandon their long bets on a wholly exposed and unprepared India, and double down on Russia. As a corollary, agriculture will become huge in Canada, and go bust in Africa and Latin America.

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Steve LeVine is the Washington correspondent at Quartz.

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