In the recent 21st session of the Conference of Parties (COP21) in Paris last November 30 to December 11, 2015, the Paris Agreement was finally adopted. After a series of negotiations and anticipation, the first global climate change treaty aiming to cut carbon emissions around the world was agreed upon by 195 country leaders. The deal was the biggest move to fight and avoid the effect of dangerous warming to the human race.

Impacts of Climate Change

Global warming as an effect of climate change is evident anywhere in the globe now and its impacts to the world economy is also noticeable. In 2015 alone, flashfloods, earthquakes, landslides, wildfires and heat waves occurred in different parts of the world. CBC News listed the nine worst natural disasters that happened in 2015 leaving thousands of people dead, homes and buildings destroyed and livelihood killed.

Eight thousand people were reported dead in Nepal and Kathmandu during the 7.8 magnitude earthquake on April 25, 2015. In South Africa, 200 people were either dead or missing and about 120,000 families have been displaced due to widespread flooding in January. On a national level, for each natural disaster that occurs there is a corresponding effect to the investors, the prices of commodities, stock market, work force and national products.

The Paris Agreement should help resolve this problem in the next decades. However, there are also business sectors that will ache with the adoption of the treaty such as coal, oil, and chemicals. The COP21’s goal in keeping the global temperature rice well below 2C would most likely mean finding more renewable sources of energy to compete or even replace coal, oil, natural gas and chemicals. While the COP21 is a great cause to the human race, it also presents a threat to some of the big industries around the world.

Safety Measures for your Portfolio

If you have large investments in one or more sectors mentioned above or in something else for that matter, you must know how to protect your portfolio from global warming.

One of the best ways to prepare for any global warming related fortuitous event is to set up an emergency fund. Much like how a country prepares for any disaster, individuals too should spare at least one year’s worth of savings for emergency purposes. Emergency funds are recommended to be placed in FDIC-insured and high-interest accounts to ensure stability and liquidity.

Another way is diversifying investments. Wide ranged investments lower the level of risk that an inventor faces. Diversification could vary in location or industries. In simple terms, it means not putting all your money in one basket. One wise diversification method is to avoid having closely related investments so that you will still have strong cards remaining when the others become weak.

The third measure is to keep your creditor status in good shape. Remember the cliché, “you’ll never know what you’re missing ’til it’s gone”? Well, an approved loan could be one of the things you would be missing if you didn’t pay your dues right. To protect your portfolio, you must be able to tap financial institutions, ask for help and get approved when everything else fails. Getting a loan, contrary to popular belief, is not always wrong. In most cases, large corporations have numerous loans to keep their businesses running and earning. Keep a healthy creditor’s record because you will never know when it comes in handy.

Lastly, make sure that you purchase insurance policies that cover damages due to natural disasters such as flood, earthquakes, landslides, etc. This may entail additional cost but the benefits are worth the investment. Look for tried and trusted insurance companies.

Now, to avoid losing a lot of money from the anticipated greener operations and new government taxes, one must get over the denial stage and start accepting that global warming is real and the worldwide carbon emission decrease campaign is already out there. Invest in the right businesses, environment-friendly equipment and processes. If you have large sums to spare, you may consider placing some in the renewable energy production sector.