Scientific Beta

Investor Strategy: "The Paris-aligned benchmarks that an increasing number of global investors now subscribe to disincentivise activities that might actually help the energy transition, according to index provider Scientific Beta. (...) “One of the greatest issues we see is defunding certain sectors,” says Mike Aked, senior investment specialist at SciBeta."

Investor Strategy 05/04/2023

"(...) Paris-aligned benchmarks (PABs) are meant to reduce portfolio carbon emissions in line with the Paris Agreement on limiting the rise in global temperatures to below 2°C and preferably to 1.5°C. But they mostly do that by excluding pollutive companies altogether, meaning that investors who use the current approach only “look like they’re doing something” when they aren’t really helping the transition at all, according to Scientific Beta (SciBeta). “One of the greatest issues we see is defunding certain sectors,” says Mike Aked (pictured), senior investment specialist at SciBeta. “We need a transition and the sectors that require serious transition, particularly utilities, need substantial funding. They need to increase their footprint by four times in terms of the amount of energy they need to produce, and that requires investment. You need to focus on reducing your carbon footprint within sectors by funding those companies that are transitioning and are doing well rather than defunding the entire thing.”"