Private capital has never been given such an important role in tackling climate change and de- carbonising the economy. As Philippe Le Houérou, CEO of International Finance Corporation (IFC), says, the private sector “holds the key,” noting that it “has the innovation, the financing and the tools.
Financing Decarbonisation
Amundi, Europe’s largest asset manager1, creates innovative solutions to bring new large-scale funding dedicated to financing the low-carbon economy.
“We started looking at our carbon strategy on the equity side, trying to optimize our portfolios’ performance in relation to the benchmark while reducing carbon risk,” says Al- ban De Faÿ, Credit Portfolio Manager and Head of SRI Fixed Income processes at Amundi. “It’s one way to integrate cli- mate-change risks into equity investments.”
Four years ago, Amundi partnered with Swedish pen- sion fund AP4, index provider MSCI and France’s Fonds de Réserve pour les Retraites (FRR), to develop a range of low- carbon indexes and subsequent passive investing strategies for a new market of investors seeking to manage and mitigate their carbon risk exposure. The MSCI Global Low Car- bon Leaders Indexes consist of companies with significantly lower carbon exposure than the broad market average.
Many emissions-intensive sectors already provide good- quality data, but other sectors are in their infancy.
“Low-carbon indexes are a good way to learn about these topics and help equity investors reduce their risk,” says De Faÿ. “We really need to improve the quality of the data and standardise this kind of risk, and building new indexes is a good way to improve the amount and quality of data avail- able.”
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