A new climate investment dashboard developed by asset manager Schroders suggests the world is on track for a 4.1°C rise in temperatures – although it does see a “clear and rising” chance of rapid decarbonisation.
The new dashboard, which will be updated quarterly, aims to measure progress towards a decarbonised world and provide more clarity about progress across a range of parameters.
“The Dashboard highlights the importance of having an all-round view of unfolding changes, rather than relying on a single indicator to inform investment decisions,” writes Head of Sustainable Investment Andrew Howard.
“Taken together, the indicators suggest we are on track for a 4.1°C rise in temperatures, far short of the 2°C commitment over pre-industrial levels global leaders made in Paris and on which many investors base their analysis.
“And while most indicators point to a change from historical business as usual trends and are moving closer to a 2°C outcome, none of the measures we look at is yet on track to meet this target.”
It’s not the first time the venerable London-listed firm has flagged up climate risk. In 2015 its Chief Economist Kevin Wade looked at the impacts of climate change.In its most recent annual report it said the issue is a “major investment risk, and one to which we are devoting increasing resources”. In 2016, it engaged with more than 530 companies worldwide on ESG issues – up more than 50% on 2015.
Howard remarks that President Trump’s withdrawal from the Paris agreement may well have “galvanized” global climate action rather than hindered it. He notes how investment valuations do not yet appear to discount significant climate impacts.
The rationale for developing the dashboard is that most investors base their worldview on a “single snapshot” of the future and struggle to incorporate other possibilities.
“Investors who are unprepared or who have relied on overly simplistic analysis risk losses and missed opportunities,” Howard says. The dashboard incorporates perspectives from politics, business, finance, technology and fossil fuel industries.
It comes as Schroders’ Cazenove Capital wealth management division is seeking a Head of Responsible Investment.