How should investors assess climate transition risk in their portfolios?
They can focus on firms with strong environmental practices, which are better positioned to navigate changing regulations, consumer preferences, and market dynamics
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
FINANCIAL markets are among the most effective tools we have to fight climate change, and the net-zero transition will require trillions of dollars in annual investment between now and 2050, according to analysts.
While that’s certainly an impressive number, given specific climate exposure-related mandates, investors at this stage want to understand the risk and return dynamics reflected in a company’s environmental score. So, how can investors assess climate transition risk in their portfolios?
Both to answer this question and to better understand the relationship between stock returns and a company’s carbon emissions, I conducted a comprehensive analysis of MSCI Europe returns from 2007 to 2022 that incorporates supply-chain related Scope 3 emissions. The study had two intriguing findings.
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
TRENDING NOW
Air India asks Tata, Singapore Airlines for funds after US$2.4 billion loss
Beijing’s calculated silence on the Iran war
China pips the US if Asean is forced to choose, but analysts warn against reading it like a sports result
Richard Eu on how core values, customers keep Singapore’s TCM chain Eu Yan Sang relevant
