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Net-Zero Carbon Portfolio Alignment

delete2022-03-29
delete20
PRE
AI
P
Patrick Bolton *
M
Marcin Kacperczyk
F
Frédéric Samama
DOI：10.1080/0015198X.2022.2033105delete
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Abstract

Abstract

En 中文
We outline a simple and robust methodology to align portfolios with a science-based, carbon budget consistent with maintaining a temperature rise below 1.5 degrees C with 83% probability. We show how to keep the tracking error at a negligible level. This approach works for both passive and active managers. It also establishes an exit roadmap for carbon-intensive corporates, thereby generating a form of competition to decarbonize within each sector. We also discuss four sources of risks: uncertainty around a rapidly shrinking carbon budget, time impacts on decarbonization rates, implementation risk due to market-wide selling pressure, and uncertainty about taxes on polluting companies.
Keywords:
benchmarking
climate change
net neutrality
net-zero portfolio construction

Journal

F
Financial Analysts Journal
IF:
2.2
Papers:
1.2K
Citations:
3.1K

Organization

C
Columbia University
Scholars:
7.1W
Papers: 6.4W
Citations: 263
I
Imperial College London
Scholars:
8.3W
Papers: 7.3W
Citations: 11.1W
U
Universite PSL
Scholars:
3.3W
Papers: 2.5W
Citations: 91
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