Scientific Beta

Financial Investigator: "Measuring and controlling the carbon intensity of a portfolio is usually part of a climate investing strategy, and serves two main purposes (...). However, carbon intensity can be cut down in many ways, and the ‘how’ matters more than the ‘how much’.

Financial Investigator 23/07/2024

By Erik Christiansen, Head of Investment Solutions, Scientific Beta

"(...) Measuring and controlling the carbon intensity of a portfolio is usually part of a climate investing strategy, and serves two main purposes: 1. Monitoring carbon intensity and reducing it through a combination of investment and engagement decisions is a core part of investors' net zero commitments: what gets measured gets managed. 2. According to the TCFD (Task Force on Climate-related Financial Disclosures), a portfolio’s carbon intensity remains a rough proxy for its exposure to climate transition risks, which many investors wish to lower, whether they believe these risks are adequately priced in by markets or not. However, carbon intensity can be cut down in many ways, and the ‘how’ matters more than the ‘how much’. (...)".