We are delighted to share with you our recent research piece: “Implementing Paris Aligned Portfolios”.

You can download the piece below.

Climate change is one of the biggest challenges of our times. Human activity, primarily through the burning of fossil fuels, has caused the temperature of the earth’s atmosphere to rise. According to the last Intergovernmental Panel on Climate Change (IPCC) study, humans are estimated to have caused 1.0°C of global warming above pre-industrial levels, with a range of 0.8°C to 1.2°C. Global warming is likely to reach 1.5°C between 2030 and 2052 if it continues to increase at the current rate.

The Paris Agreement aims at limiting any further increase in temperatures, holding it well below 2°C and pursuing efforts to keep it even below 1.5°C. The financial ecosystem with asset owners, asset managers and banks could contribute here. While it is unrealistic to expect that the financial industry alone can solve the climate issue, it is urgent that everyone contributes to the best extent possible.

However, what does this mean in practice for portfolios? In this note, we dig deeper into:

• How to translate climate research results into principles for portfolio construction?
• What are the key elements of a “Paris Aligned” portfolio?
• Where do we currently see the largest uncertainties and issues in the data and modeling?

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