The TCFD recommends that organizations identify, assess and manage climate-related risks and opportunities within the context of an organizationwide risk management framework. That includes looking at risk from varying time horizons, such as the short, medium and long terms.
Tilting portfolios toward companies that are low emitters and allocating to those that reduce their carbon emissions over time are among alternatives investors can use in climate-aligned portfolios, according to a report by MSCI ESG Research.
Investors took center stage at this year's gathering, which featured a focus on their role in driving global greenhouse gas emissions to net-zero, the need for credible decarbonization plans from companies, and hopes for action from COP26.
The number of companies aligned with a world that limits temperature rise to 1.5°C could shrink as the reductions needed to reach net-zero emissions grow steeper with each passing year. That could leave investors struggling to find companies to invest in.
Climate benchmarks can help investors to implement net-zero-aligned strategies in a consistent way, avoid stranded assets, identify green opportunities and encourage portfolio companies to develop climate-resilient business models.
Investors can align investment portfolios with the global goal of reducing GHG emissions to net-zero using a framework designed to assess the resiliency of companies to the decarbonization of the economy. This framework covers four dimensions.
Just as investors focus on climate resiliency among portfolio companies, they also can take meaningful steps to make net-zero part of their own organizations. Such steps may include disclosing their greenhouse gas emissions and mapping out decarbonization targets.
“Net-Zero Now,” a new documentary by MSCI, shows how decarbonizing the global economy will depend on rechanneling capital at a scale needed to transform how the planet produces and consumes energy, and why investors will play a critical role in averting a climate disaster.