Climate change is the largest long-term systemic risk in client portfolios today. The world is continuing to heat up and countries and companies will need to drastically reduce global carbon emissions by 2050 to pursue efforts to limit the increase in global temperature to 1.5 degrees Celsius, as set out by the Paris Agreement.
Today, the climate investment landscape is a veritable mixed bag of active and passive approaches covering a broad spectrum of investment universes and objectives. Investors are unclear, however, as to how many of these align with the 1.5 degrees Celsius warming objective.
First generation climate strategies that target "low emissions" or "green solutions only" objectives miss the point that climate change will impact every company and economy, and every company and economy can have an impact on climate change. We believe the best approach is one that assesses the risks and opportunities across corporate value chains associated with the transition journey to a lower-carbon world, while engaging with companies to align with the warming objective by adopting science-based targets.