Schroders launched a model under the name of climate change dashboard to provide investors with insight into the progress made by industry and politics in the implementation of the two-degree target for global warming and transition to a low carbon economy.
The dashboard developed by the sustainability team of Schroders determines the long-term temperature rise to which the world is moving. It is based on a framework of different indicators from the areas of politics, business, technological development and energy.
The twelve indicators, which are the main drivers and control variables of climate change and are evaluated by Schroders, are currently all over the international target of limiting global warming to less than 2°C. This target was set in December 2015 in the Paris Climate Agreement.
On average, the indicators of the dashboard are currently pointing to a temperature rise of around 4°C, a doubling of the Paris climate protection target.
The decision of US President Donald Trump last month to withdraw from the agreement with the United States will make efforts to limit global warming more difficult.
The climate change dashboard reveals the different levels of commitment in various industries and indicators. While global political measures are expected to reach a temperature rise of 3.6°C, oil and gas production has recently reached a level that would double the temperature. This gives an idea of the risks of energy companies.
Andrew Howard, head of Sustainable Research at Schroders said: “Climate change is a major challenge for the global economy, industry and financial markets. However, too little is known about the means by which the associated risks can be covered. Therefore, it is important to gain an understanding of the development speed and the impact on assets.
We have developed the climate change dashboard to show a completely new perspective on the pace of this change. It captures the key trends and progress towards reducing climate-damaging emissions. This provides an objective and transparent insight into the changes and helps investors to make decisions about the developments that are actually to be expected, instead of merely relying on hopes and wishes.”
The sustainability experts from Schroders will update the climate change dashboard quarterly. This allows the global successes in the implementation of the Paris climate protection targets to be pursued in real time. This helps Schroders’ portfolio managers to better manage the risks associated with climate change.