When it comes to greening the investment portfolio, climate tunnel vision is lurking
Amidst the growing importance of sustainability, it is crucial to acknowledge the heightened relevance of incorporating sustainable practices into investment portfolios. Institutional investors are rightfully placing significant emphasis on this aspect. Nevertheless, when it comes to implementing and managing sustainability objectives in passive equity portfolios, careful decision-making becomes imperative. It is essential to exercise caution and avoid falling into the trap of climate tunnel vision by solely relying on seemingly straightforward solutions like the Paris Aligned Benchmark.
Recognizing the need for enhanced standards and guidelines in sustainable investing, the European Union introduced two benchmark types in late 2019: the Paris Aligned Benchmark (PAB) and the Climate Transition Benchmark (CTB). These benchmarks have garnered increasing attention from Dutch pension funds and insurers, although their initial adoption was met with some caution. By aiming to align with the goals of the Paris Climate Agreement, both benchmarks prioritize reducing CO2 emissions, aspiring to create a climate-neutral world by 2050. In this article, Dennis van der Putten and Caspar Snijders discuss both the two types of benchmarks and the benefits of a holistic approach.
Recognizing the need for enhanced standards and guidelines in sustainable investing, the European Union introduced two benchmark types in late 2019: the Paris Aligned Benchmark (PAB) and the Climate Transition Benchmark (CTB). These benchmarks have garnered increasing attention from Dutch pension funds and insurers, although their initial adoption was met with some caution. By aiming to align with the goals of the Paris Climate Agreement, both benchmarks prioritize reducing CO2 emissions, aspiring to create a climate-neutral world by 2050. In this article, Dennis van der Putten and Caspar Snijders discuss both the two types of benchmarks and the benefits of a holistic approach.
