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Abstract

In November 2006, WWF Germany and Sustainable Asset Management (SAM) published the report 'Carbonizing Valuation: Assessing Corporate Value at Risk'. The report argued that utility companies' financial value was at considerable risk in a future with stricter laws restricting carbon emissions. It modelled cash flows from a selection of German electric utility RWE's power plants and concluded that if RWE treated carbon emissions as business-as-usual, it could lose up to 17% of its net-equity value. As Joachim Lochte, RWE Group Head of Energy / Environmental Policy, read the report, he noted that the replacement scenarios modelled fuel-by-fuel, coal and gas but omitted two possibilities: nuclear energy and renewable energy. He sent an email outlining his concerns with the report and its assumptions to author Matthias Kopp at WWF. Kopp replied by inviting Lochte to be on a panel at the report's launch in London in January, to express his opinion to the financial community in attendance. The financial impact of climate change had become highly visible, and Lochte knew the event would be well attended. He wondered who from RWE should attend the meeting. Was it significant enough for the CFO or COO to attend? What communication strategy could RWE adopt around this issue?
Location:
Size:
2006 revenues EUR44.3 billion
Other setting(s):
2006-2007

About

Abstract

In November 2006, WWF Germany and Sustainable Asset Management (SAM) published the report 'Carbonizing Valuation: Assessing Corporate Value at Risk'. The report argued that utility companies' financial value was at considerable risk in a future with stricter laws restricting carbon emissions. It modelled cash flows from a selection of German electric utility RWE's power plants and concluded that if RWE treated carbon emissions as business-as-usual, it could lose up to 17% of its net-equity value. As Joachim Lochte, RWE Group Head of Energy / Environmental Policy, read the report, he noted that the replacement scenarios modelled fuel-by-fuel, coal and gas but omitted two possibilities: nuclear energy and renewable energy. He sent an email outlining his concerns with the report and its assumptions to author Matthias Kopp at WWF. Kopp replied by inviting Lochte to be on a panel at the report's launch in London in January, to express his opinion to the financial community in attendance. The financial impact of climate change had become highly visible, and Lochte knew the event would be well attended. He wondered who from RWE should attend the meeting. Was it significant enough for the CFO or COO to attend? What communication strategy could RWE adopt around this issue?

Settings

Location:
Size:
2006 revenues EUR44.3 billion
Other setting(s):
2006-2007

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