Scientific Beta

This paper shows how Scientific Beta’s Climate Impact Consistent (CIC) indices integrate the 10 principles of the UN-convened Net-Zero Asset Owner Alliance (NZAOA) and also demonstrates how many indices that comply with the regulated Paris Aligned Benchmark (PAB) constraints fail to reflect some of the NZAOA's core benchmark principles.

The UN-convened Net-Zero Asset Owner Alliance (NZAOA) recently launched a call to action for asset owners and index providers for the development and uptake of Net-Zero-Aligned Benchmarks. NZAOA spells out 10 principles such indices should follow to underpin the alliance's goal of transitioning investment portfolios to net-zero greenhouse gas (GHG) emissions by 2050, consistent with a maximum temperature rise of 1.5°C above pre-industrial levels.

• In the first part of this document, we show how Scientific Beta’s Climate Impact Consistent (CIC) indices integrate these 10 principles. Indeed, the CIC indices are designed to maximise the climate-impact potential of an investment strategy and, in line with the commitment that NZAOA members make, they "emphasise GHG emissions reduction outcomes in the real economy".
  
  
• The NZAOA also points to some of the shortcomings of the European Union’s climate benchmarks. Scientific Beta has previously voiced concerns about this regulation and concurs with the NZAOA's arguments. In the second part of this document, we show how many indices that comply with the regulated Paris Aligned Benchmark (PAB) constraints fail to reflect some of the NZAOA's core benchmark principles.