The CFA Institute has released an in-depth guide to advance the practice of investing for net zero.
Grygo is the chief content officer for FTF & FTF News.
Despite backlashes against ESG-based efforts, is it time to start thinking about net-zero investing?
Officials at the CFA Institute Research and Policy Center think so and recently released a guide to help investors (and investment firms) “advance the theory and practice of net-zero investing.”
The guide is a serialized volume, “Investment Innovations Toward Achieving Net Zero: Voices of Influence,” that “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.”
“Net-Zero investing is really still in its infancy,” explains Chris Fidler, head, global industry standards at the CFA Institute, in a prepared statement. “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.”
The guide is intended to help standardize and improve climate disclosures and facilitate “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,” Fidler adds.
The themes covered include:
- Cooperation: “Systems-level thinking, international cooperation, renewable energy investments, and climate-hedged portfolios to mitigate the impacts of climate change;”
- Duty and Climate Goals: “Setting realistic climate goals, influencing government policy, and ensuring fiduciary duties align with climate objectives;”
- Decarbonization and Carbon Pricing Trends: “Global carbon pricing trends, the decreasing costs of decarbonization technologies, and the role of policy harmonization 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;” and
- Net-Zero-Aligned Portfolios: “Dynamic portfolio rebalancing, multi-objective optimization tools, and machine learning large language models to address data gaps, greenwashing, and uncertainties in net-zero investing.”
The guide even offers 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;” and
- “The second examines green and transition finance at the municipal level through the lens of Huzhou City in China.”
Access to the full guide can be found here: https://shorturl.at/uB7Ef
The CFA Institute is a global association of investment professionals that promotes “ethical behavior in investment markets” and learning and research for the investment industry. The organization has more than 200,000 charter-holders worldwide across 160 markets and has 10 offices and 160 local societies, officials say.
