Thursday 28 October 2021

Just 0.5% of $27tn global fund assets are aligned with Paris Agreement

Less than 1% of global investment fund assets worth $27 trillion (£19.5tn) are currently aligned with the aims of the Paris Agreement.

This is to maintain global temperatures below 2°C and pursue efforts to keep this to 1.5°C.

The data has been published by non-profit CDP, which found only 158 funds out of the 16,500 it analysed were on track to achieve the climate aims.

The vast majority of these global funds are currently invested in assets that have a temperature path of 2.75°C.

CDP has stated its temperature ratings are based on science-based analysis, emission reduction targets and companies’ past performances when it comes to reducing emissions.

The funds within the research make up more than a third of the global fund industry and the non-profit has stated this makes the results even more distressing.

When considering Scope 3 emissions or those that derive from the supply chain, the number of funds aligned with the Paris Agreement drops from 158 to 65 or just 0.2%.

Laurent Babikian, CDP, commented: “Global leaders land this week in Rome for the G20 and in Glasgow for COP26, where ensuring 1.5°C is achievable and global climate finance mobilized are two key objectives.

“But this data is catastrophic. Despite mounting net zero commitments from the financial sector, and an apparent ESG ‘boom’, the truth is that not even 1% of fund assets are currently Paris-aligned.

“This is like an X-ray on the industry, exposing almost all assets on the planet to be out of step with climate objectives.

“It’s an urgent reality check for real, credible actions now from the financial community to step up engagement with their portfolios and take decisive action to transition their portfolios onto a 1.5°C path.”