Making portfolio decisions and climate engagement consistent

Presented by

Responsible Investor in partnership with Scientific Beta

About this talk

Investment strategies aimed at transforming the economy to achieve Net Zero carbon emissions goals need to focus on how investors influence each company across all sectors to align their business models and develop climate solutions. The two Net Zero investment frameworks published in 2021 – from the PAII and the NZAOA – thus rightly place the emphasis on company-level engagements between shareholders and companies. Indeed, as we will show in this webinar, climate investment strategies with seemingly attractive portfolio-level carbon metrics can send completely inconsistent climate signals to individual company managers. They can also reduce the capital allocation to the very industries that need to finance the biggest technological shifts towards net zero alignment, another blatant form of greenwashing. We will also show how the Scientific Beta’s Climate Impact Consistent (CIC) indices address these shortcomings through the choice of metrics and portfolio construction methodology that encourages decarbonisation of the real economy. In the construction of CIC indices, which are pure climate indices, issuer-level climate performance and decarbonisation, relative to the relevant sector, unambiguously determine a constituent’s weight and its variation over time. Capital allocation thus not only influences the terms on which issuers may enjoy access to capital but also sends them clear signals about the importance of decarbonising. In this webinar we present the principles of Net Zero-aligned investment frameworks, the bottom-up portfolio construction methodology that ensures consistency between the stock-level decisions and the overall climate impact goals, and the resulting financial and climate characteristics. Speakers: Erik Christiansen, ESG & Low Carbon Solutions Specialist, Scientific Beta Eric Shirbini, Global Research and Investment Solutions Director, Scientific Beta Moderator: Daniel Brooksbank, Responsible Investor

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