Scalable Solutions Can Decarbonize Portfolios

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    Scalable mainstream solutions exist to decarbonize portfolios, says Frédéric Hoogveld, index and smart beta portfolio management investment specialist at Amundi Asset Management. Speaking at the Amundi and Responsible Investment Association session ‘Low Carbon Equity Solutions: Hedging Climate Risk in Equity Portfolios,’ he said with $4 billion managed in low carbon strategies, they are seeing more interest from institutional investors. As well, demand is growing because carbon dependent companies will be penalized and there is a belief markets do not yet price the emission of carbon dioxide. However, more solutions are available because reporting on carbon has improved greatly in last 10 years. There is now a good idea of where emissions come from and which companies are responsible. Coupled with this is the fact that more countries are looking at requiring mandatory carbon disclosure. With climate risk among the top three risks for policy-makers, this means investors can both generate potential outperformance while investing responsibly.