Measuring Portfolio Alignment

As countries turn the Paris Agreement goals into nationally legislated objectives to achieve Net Zero, the financial sector will need to adapt and allocate capital according to their understanding of the opportunities and risks in the transition. Financial institutions will also increasingly be expected to disclose the alignment of their investments to net zero and show how clients’ money is invested. Existing climate-related measures all serve an important purpose for this community, but aren’t yet as forward-looking, robust, decision useful and comparable as they need to be to measure portfolio alignment.

This report is an excellent critical assessment of the strengths and trade-offs of the options available to measure the alignment of investments with climate goals and is an important contribution to the debate. I hope that it will serve as a basis for discussion in the industry on the approaches to measurement so that by COP 26, investors and creditors can robustly answer how their clients’ money is invested for the transition.

Click here to read the full report