Managing Portfolio Risk Along the Net-Zero Journey

The goal of the Paris Agreement is to limit the average global temperature rise to well below 2°C, and preferably to no more than 1.5°C, by 2021 from pre-industrial levels. To achieve this objective, the world needs to reduce its net emission of greenhouse gases to zero — and soon. In this third MSCI Net-Zero Alignment paper, we examine the challenges presented by both climate change and the net-zero transition to investors looking to measure and manage climate risk in their portfolios.

Effective management of climate risk requires a clear understanding of its multifaceted nature. Broadly speaking, climate risk can be broken down into physical risk and transition risk, and it can impact companies and investors via both microeconomic and macroeconomic transmission channels.

You can now read the full whitepaper at the link below