Five figures that explain climate investment in the management of multiple assets

Our asset investment team has created five pictures to help you understand how they think about investing in the climate.

Ben Popatlal, Multi-Asset Strategist, and Leslie-Ann Morgan, Multi-Asset Strategy Manager

Leslie Ann Morgan

1. Sustainability is a two-way street

all investors need to consider the impact of climate on their portfolio. But investors whose portfolios are focused on sustainability need to go a little further. They need to consider the impact of their portfolio on the climate.

2022.06.24.stability

Benjamin Popatlal

2. The method of measuring climate equalization is no longer binary

In the past, the asset was either “adapted to the climate” or not; Climate harmonization is now assessed on a more gradual scale.

2022.06.24.climate equalization

3. Be careful not to push your wallet in too quickly

Improving the climate profile of your portfolio too quickly can lead to higher investment risks than the benchmark. It is important to understand where these boundaries lie in order to create a portfolio that meets both investment and climate goals. Climate improvement is to some extent “free”; this does not jeopardize the investment objectives of the portfolio.

2022.06.24.risk of stability

4. The trajectory will certainly not be linear, and faster evolution is not necessarily better

The trajectory of decarbonization of the portfolio is not linear. A faster trajectory is not necessarily better, as improving the portfolio does not necessarily mean improving the climate (cf. Doodle 1). In the doodle below, “updates today” are the “free” updates we mentioned in the previous doodle. But the vast majority of climate improvement takes time.

2022.06.24.improvement of emissions

5. Investors have three main tools to achieve their climate goals

Our “climate distribution” of investment emphasizes three tools that investors have to achieve their climate goals. Avoid objects with the worst weather profiles, look for objects with the best weather profiles, and encourage them to improve all other objects.

2022.06.24.three measuring instruments


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