In this new research paper co-authors Patrick Bolton, Marcin T. Kacperczyk and Frederic Samama outline a simple and robust methodology to align portfolios with a science-based, carbon budget consistent with maintaining a temperature rise below 1.5oC with 83% probability.
The paper shows how to keep the tracking error at a negligible level. This approach works for both passive and active managers. It also establishes an exit roadmap for carbon-intensive corporates, thereby generating a form of competition to decarbonize within each sector.
Four sources of risks are discussed:
- Uncertainty around a rapidly shrinking carbon budget
- Time impacts on decarbonization rates
- Implementation risk due to market-wide selling pressure
- Uncertainty about taxes on polluting companies.
View the Webinar recording "Achieving Net-Zero: Crossing Views from Academia, Index and Active Investing" below
As well as outlining the key findings of the report, the webinar focuses on the practical implications of these findings for industry leaders. Presented by Patrick Bolton and Michael Wilkins from the CCFI, with responses from Jas Duhra, Head of ESG Indices at S&P Dow Jones Indices, and Sara Razmpa, Head of Responsible Investment at Unigestion.
This webinar is the second in a series of three climate finance webinars hosted by the Centre for Climate Finance & Investment and sponsored by asset-manager Unigestion.