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Budget Speech
Financial Planning
February 20, 2019

Carbon Tax - A global perspective

<strong>By: Andrew Howard, Head of Sustainable Research at Schroders</strong>

The Minister of Finance, Tito Mboweni, announced yesterday that the Carbon Tax Bill will be implemented from 1 June 2019.

<em>“Carbon pricing schemes are gathering momentum globally with almost one-quarter of the world’s carbon emissions now facing a financial penalty. However, in general those prices are too low to drive the changes we need to keep temperature increases to levels that will hopefully be safe. </em>

<em>“We believe the $8-9 per tonne level that we understand South Africa is planning to implement falls short of the levels close to $100 we expect will be needed. That said, it’s a start, and sets a platform for tougher action in the future. </em>

<em>“Another aspect to consider is that at higher prices, significant impacts on companies’ profits and valuations seems inevitable. As a result we have developed a Carbon Value at Risk model to examine the risks companies face (Click <a href="https://www.schroders.com/en/ch/asset-management/literature/climate-change-dashboard/carbon-var/" data-saferedirecturl="https://www.google.com/url?q=https://www.schroders.com/en/ch/asset-management/literature/climate-change-dashboard/carbon-var/&amp;source=gmail&amp;ust=1550761466012000&amp;usg=AFQjCNGo_1qE2trdYT_lloL-Z_oursRkcw">here</a> to access) and globally, we estimate that about 15% of listed companies’ value is at risk if carbon prices rise far enough to address the climate challenge facing global societies.</em>

<em>“It is critical that investors examine and plan for those impacts before they unfold. Climate change is no longer a theoretical question for investors, if it ever was. There are no short cuts for asset managers - we have invested a lot of time and energy to make sure we are preparing as well as we can and hopefully others in the industry will do so too.”</em>

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