News & Insights

Nearly all countries have signed up to the UN Paris Agreement, a legally binding international treaty with the overarching goal of holding the increase in global average temperature to well below 2 degrees Celsius above pre-industrial levels and an intention to make efforts to limit the temperature rise to 1.5 degrees Celsius above pre-industrial levels.

In this article we examine the responses that we have seen by discretionary investment managers and their clients to the challenge of climate change and we suggest a simple investor response that would help embed “net zero” into investment outcomes.

Key Takeaways:

1. Behavioural Responses: There are two primary ways people react to environmental, social, and governance (ESG) issues and climate change in the investment sector: like ostriches who avoid the problem, or like meerkats who obsess over it. Both extremes are problematic and finding a middle ground is essential for rational decision-making.
2. Information Overload and Greenwashing: Investment managers and investors are grappling with a massive influx of data and metrics related to climate change and ESG, leading to confusion and scepticism. The article highlights the importance of clear and authentic performance reporting, cautioning against "greenwashing" or presenting a falsely eco-friendly image.
3. Carbon Offsets as a Solution: Carbon offsetting is an actionable step investors can take now to move towards net-zero emissions. Investment managers should provide data for carbon emissions per pound invested, allowing clients to calculate and offset their carbon footprint, thus making a meaningful contribution to climate action.

Whether you are an ostrich, burying your head in the sand to avoid facing such a complex problem or a hyper-vigilant meerkat stuck in a quagmire of confusing data, carbon intensity offers a simple actionable data point.