The CFA Institute Research and Policy Center has released a new guide for investors that aims to help advance the theory and practice of net-zero investing.
Serialised and also published in one complete volume entitled Investment Innovations Toward Achieving Net Zero: Voices of Influence, the guide offers 16 research papers from more than 50 leading academics and investment industry professionals who share their practical solutions and strategies for net-zero investing.
Chris Fidler,Head, Global Industry Standards, CFA Institute, comments:
“Net-Zero investing is really still in its infancy. Against this backdrop, we’ve brought together experts from across the globe to break down the big ideas around net-zero investing and create an extended knowledge bank for investors seeking to incorporate net-zero strategies into their portfolios. The guide provides a comprehensive overview of the latest practices and trends, helping illuminate pathways to understanding the intricate dynamics of net-zero investing, while aligning financial objectives with client goals.”
“As we see throughout the guide, climate-related disclosures play a central role. At CFA Institute, we advocate for relevant, reliable, comparable, timely, and understandable climate-related disclosures that are useful for investors. Standardising climate disclosures and improving quality is crucial, along with assurance by independent professionals. We hope the newly published guide will serve as a valuable resource for those seeking to navigate the evolving landscape of net-zero investing.”
Themes featured include:
- Global Cooperation: Systems-level thinking, international cooperation, renewable energy investments, and climate-hedged
- portfolios to mitigate the impacts of climate change.
- Fiduciary Duty and Climate Goals: Setting realistic climate goals, influencing government policy, and ensuring fiduciary duties align with climate objectives.
- Decarbonisation and Carbon Pricing Trends: Global carbon pricing trends, the decreasing costs of decarbonisation technologies, and the role of policy harmonisation in reducing emissions and achieving net-zero targets.
- Measuring Carbon Emissions: Carbon intensity as a financial risk factor, better carbon emission metrics and climate risk ratings.
- Net-Zero-Aligned Portfolios: Dynamic portfolio rebalancing, multi-objective optimisation tools, and machine learning large language models to address data gaps, greenwashing, and uncertainties in net-zero investing.
The guide includes two case studies.
The first case study explores a methodology for constructing net-zero aligned portfolios drawing on the example of Danish pension fund PenSam. The second examines green and transition finance at the municipal level through the lens of Huzhou City in China.
To access the full guide, visit Investment Innovations Toward Achieving Net Zero: Voices of Influence. To see all contributing authors, visit here.
