Investment Institute

Climate Alignment Principles: How to invest in line with a +1.5˚C goal

  • 18 December 2020 (5 min read)

Executive summary

As efforts to deliver on the Paris Agreement galvanise, investors are beginning to switch from simple commitments to tangible actions. We are increasingly asked by clients: “How can we invest in line with the 1.5°C goal?” This research paper explains our proposed approach, which we call our Climate Alignment Principles

There have been numerous industry efforts to establish a framework to help investors with this aim. These cover the entire process from investment governance, to policy, target setting, asset allocation and stewardship, as well as reporting and monitoring. The focus of this paper is on investment. We have covered the other sections in prior papers including our 2020 Taskforce for Climate-related Financial Disclosure Report, Climate Scenario Analysis, and Strategic Asset Allocation for a +1.5°C World

Investments aligned with a credible pathway to delivering on the Paris Agreement will need to be primarily focused on one of two objectives. These are either opportunities enabling the climate transition via new products and services, or companies which are rapidly decarbonising at a rate akin to what climate science requires to keep global warming to +1.5°C versus pre-industrial times

At AXA Investment Managers, we propose to start from a set of principles which guide our decision-making and frame the selection of tools and key performance indicators to achieve portfolio alignment. We believe that by following these principles we can effectively navigate the evolving landscape and constructively tackle the challenge of aligning our strategies with the Paris Agreement

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    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date.
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