Following the money: Addressing financed emissions to reach net zero
Head of Secured Credit Colin Fleury and Portfolio Manager Denis Struc explain that investors seeking to maximise the role they play in decarbonisation need to focus on how the capital they allocate enables emissions.
1 minute read
Key takeaways:
- The investment management industry has a role to play in helping to reduce total carbon emissions, but it is important to remember that the industry wields material influence only over the specific uses that companies’ capital is put to.
- Gaining a full understanding of the role capital plays in emissions starts by linking the capital allocated by investors to the activity that emits carbon emissions, and the tools used by the investment industry to enable the economic activity of corporations and consumers provide a useful roadmap.
- Investors who overlook Scope 3 have little insight into the true size of the emissions financed by their capital and potentially underestimate risks faced by their portfolios.
When solving a problem – especially one that requires consensus from diverse stakeholders – it’s helpful to have one simple and overarching goal. In the case of climate change, that ‘big picture’ goal is the reduction of carbon and other greenhouse gases (GHG) released into the atmosphere. As a significant allocator of capital, the investment management industry has a role to play in helping to reduce total carbon emissions. It is important, however, to remember that the industry wields material influence only over the specific use their capital is put to.
The purpose of this piece is to show that, whilst the increase in carbon data in recent years is essential to understanding how GHG are emitted into the atmosphere and arranging emissions into various “Scopes” can be helpful, all this needs to be understood within the context of who has influence over capital that enables emissions in each circumstance.
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These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
There is no guarantee that past trends will continue, or forecasts will be realised.
Marketing Communication.
1 minute read
Key takeaways:
- The investment management industry has a role to play in helping to reduce total carbon emissions, but it is important to remember that the industry wields material influence only over the specific uses that companies’ capital is put to.
- Gaining a full understanding of the role capital plays in emissions starts by linking the capital allocated by investors to the activity that emits carbon emissions, and the tools used by the investment industry to enable the economic activity of corporations and consumers provide a useful roadmap.
- Investors who overlook Scope 3 have little insight into the true size of the emissions financed by their capital and potentially underestimate risks faced by their portfolios.