This article reports that BlackRock Inc., the world’s largest asset management firm, has begun to consider climate change in its risk assessment process. Blackrock fears that the UN climate change summit taking place at the end of November would spawn “a raft of new rules to curb carbon emissions”; thus, the impact of these rules (dubbed “regulatory risks”) would now be considered in their investment portfolios.

I think a large majority of political officials across the globe recognize climate change as a very real threat. There’s a good chance that some new policies that come out of the summit will have large impacts on many industrial firms.

Specifically, old, gas, and fossil fuel firms in general are highly vulnerable to the Political factors listed in the PEST environmental analysis tool. Because of a change in laws or industrial regulations, they have to change their behaviors in order to continue maximizing profit.

However, any new carbon-control rules will undoubtedly hit inefficient, high-polluting producers the hardest, reducing competition for firms that do manage to adapt and survive. For some fossil fuel firms, this could potentially be beneficial; according to Porter’s five forces, reduced rivalry means increased bargaining power for suppliers and decreased bargaining power for buyers.

In any case, oil, gas, and other fossil fuel firms as well as their investors might have to drastically change the ways they operate or invest in the near future.