Investors need temperature-based climate metrics

As investors seek to mitigate climate risks in their portfolios, there is a lack of transparent information to enable them to make choices. New research from Cambridge Institute for Sustainability Leadership's Investment Leaders Group (ILG) has offered a framework and simple disclosure method for financial institutions.

ILG is a global network of pension funds, insurers and asset managers committed to advancing the practice of responsible investment including Aon, HSBC State Street and Zurich with over £14tr in assets under management.

In its new report, the Group argues that the total greenhouse gas (GHG) emissions (Scope 1 and 2) offers a snapshot of emissions performance, but does not show whether an asset's emissions path is consistent with the Paris ambition. It proposes that a temperature score would offers a meaningful, outcome-based number in degrees centigrade (°C) that reveals instantly how a fund aligns with the Paris ambition.

Moreover, such a temperature-based score would be easy to understand both by professional investors and the general public.

Report here.

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