Net-Zero Alignment: Portfolio Construction Approaches for Investors
Dec 1, 2021
Post-COP26, the need to reach net-zero — that is, producing less carbon than we put into the air — is more compelling than ever. How can investors approach a net-zero pathway in their global equities portfolio? Creating a portfolio currently aligned with a 1.5- or 2-degree Celsius implied temperature rise would eliminate most of the global equities universe. We explore three portfolio-construction approaches that target reductions in carbon emissions over time.
The exhibit below illustrates the challenges in creating a global equities portfolio that is 1.5°C- or 2.0˚C-aligned from the outset.
Active Sector Weights in Hypothetical 1.5°C- or 2.0˚C-Aligned Portfolios
Relative to MSCI ACWI Index. As of Aug. 31, 2021. Source: MSCI
Net-Zero Alignment: Objectives and Strategic Approaches for Investors
We investigated three common approaches to net-zero investing to see whether they can have a real impact on decarbonizing the economy.Access Report
Implied Temperature Rise
Designed to show the temperature alignment of your investments with global climate targets.Learn More
Understanding MSCI Climate Indexes: Methodologies, Facts and Figures
Integrating climate considerations into an investor’s set of benchmarks is one way to build a consistent framework for integrating climate risk across an entire portfolio.Access the Paper