Goldman Sachs Asset Management’s Post

"Low carbon," "net zero," "energy transition," "green technology," and "climate solutions," are among the many terms applied to climate-focused investment strategies. How do they differ in terms of ESG-related outcomes, and what are their implications for risk and return? Check out the latest report from #MorningstarIndexes' Dan Lefkovitz to find out. https://lnkd.in/ggf7_qHF

The article discusses the challenges and opportunities associated with voluntary carbon markets (VCMs). It highlights that while VCMs have grown rapidly and can play a crucial role in financing various climate solutions, they are currently constrained by information asymmetry. This means that data and information about credits, including their performance and transaction history, are not easily accessible or used for decision-making. As a result, credits are often issued and priced based on subjective claims rather than verifiable emissions impact. The article emphasizes the need for transparency, reliability, and integrity in VCMs to ensure their effectiveness in addressing climate change. It also mentions the emergence of new companies attempting to tackle specific aspects of the VCM landscape. An interesting read. https://lnkd.in/diKJNK3J

Climate change is solvable today. It can be solved in the marketplace using solutions already available to us. Over the past few years, I’ve witnessed and helped advance critical climate technologies, an increased appetite for clean energy, and a collective sense of urgency around the climate crisis. It is abundantly clear that the push toward decarbonization presents a unique opportunity for investors to capitalize on the tailwinds of the energy transition. That is the driving force behind our work at Galvanize Climate Solutions, which I co-founded with my business partner Katie Hall in 2021. A multi-strategy investment firm focused exclusively on the energy transition, we believe that impact and returns are inextricably linked. By unleashing the full potential of the private and public sectors, there is no challenge we cannot tackle. https://lnkd.in/ewRi_aMF

We're pleased to share the first article in a six-part series developed in partnership with FS Sustainability.   With companies facing mounting pressure to set ambitious targets, navigate mandatory climate disclosures and establish resilience, building climate factors into investment decision-making just "makes businesses sense".   In this Q&A, Energetics' Finance Sector Lead, Stephen Catchpole, was interviewed on the importance of addressing both the challenges and opportunities posed by climate change, and the considerations that investors and companies need to take to ensure they will be successful.   https://lnkd.in/geV5xCWc #netzero #climatedisclosure #climaterisk #climatechange

Perhaps in the future, we may have to underwrite a positive climate outcome for simply every investment, just like we underwrite a return. https://lnkd.in/gh7RWWcd This PwC report from around a month ago, made an interesting point: "...There are also signs that climate tech investment is becoming more mainstream, with seasoned climate investors (who have invested in five or more climate tech deals) taking up a smaller share of the total number engaging in climate tech, as the share of first timers increases."  Perhaps the day is not far, when climate will cease to be a separate investment class, and a "positive climate outcome" will simply become a primary marker of a good investment. #climatetech #climateinvesting

#ClimateWeek saw a number of key announcements relevant to financial institutions and which added further momentum on the need to develop and deliver credible and compelling #netzero #transitionplans. Brunswick hosted a private dinner on that topic with 15 heads of sustainable finance, #climate strategy and ESG. This short note captures some of the themes to emerge from that discussion. Plus our take on the key developments, what they mean for corporates and where we expect stakeholder scrutiny to intensify next. Jordan Bickerton Nick Rice Diana Walker Zaman Toleafoa

We can’t afford to wait until 2025 for meaningful #climateimpact – we need to act now. Carbon compensation is a crucial lever for achieving this. It is, however, still done via a nascent and imperfect market, which is why the Science Based Targets initiative has grappled with its potential at this pivotal moment for the planet. We at South Pole welcome SBTi’s call to explore the use of carbon credits from mitigation activities within the corporate value chain, or when used to support the neutralisation of residual emissions. But we're just not cutting carbon fast enough and therefore need ways to accelerate the flow of finance towards negative emissions – from nature-based carbon sinks to tech removals and solutions to decarbonise industry. We also need to do this on a global scale - in the Global North and Global South. We know today that private investment through a robust credit trading system will drive significant climate progress on these fronts. To truly accelerate, we need to incentivise both decarbonisation and global climate adaptation through results-based tools. The turnkey solution is regulation. It will ensure supply side integrity, clear demand signals, and a professionalisation of market infrastructure – providing the clarity and confidence businesses need to take decisive action now, not in 2025. Let’s rally leaders to step up and make an impact, today. https://lnkd.in/et--HtST #carbonmarket #carboncredit #netzero

Investors are turning green with interest! The following article discusses climate action as the top ranked sustainable theme among investors. Read more to explore the latest trends in shaping the future of finance. Reach out if you would like to discuss more! #SustainableInvesting #MorganStanley #ClimateAction

Even after many years in the industry, I continue looking for a fresh angle to the ‘known’, for an opportunity to expand my understanding. In the realm of climate investing, the landscape is diverse, with various frameworks and references, making it easy to overlook the bigger picture. Recently, I completed a course that has provided me with a clearer view of this broader perspective. It is the Cambridge course "Climate Change for Decision Makers". https://lnkd.in/du7yTMXn I was really impressed by the quality of the materials and the organisers' skill in synthesizing vast amounts of information across three key topics: -    climate change and planetary boundaries, -    energy and systems transition, -    net-zero governance, stranded assets, and critical raw materials. It gave me a fresh perspective on the varying applicability of businesses in the new low-carbon economy and the potential role for private equity. I delve deeper into this topic in my recent article, https://lnkd.in/df_uvcQX It has been particularly valuable to realise that continued and concerted action towards system transition can trigger positive tipping points, such as reducing the levelized cost of energy or EVs. Consequently, countries and organizations most active in the field of climate change can benefit from a first-mover advantage through their sustained action. The private equity field is well-equipped with the knowledge and skillset to become a significant player in the transition to a low-carbon economy, and I hope to see more news from respective funds regarding their future deals in this field. I extend my gratitude to Jorge E. Vinuales and Katherine Bruce for their support and guidance during the course. It has been both challenging and fulfilling for me! #climatefinance #climateinvestment #privateequity #climatetech #PEforClimate

Yesterday, Allianz CEO Oliver Bäte addressed the United Nations 2023 Global Ambition Summit. He spoke of our belief in the power of partnerships and our staunch support of the UN-convened Net Zero Asset Owner Alliance (NZAOA), which we helped launch in 2019 and currently chair. Today, its 86 members include insurers, endowments, pension funds, and foundations – all committed to moving their investment portfolios to net-zero by 2050. The NZAOA is not a climate “talk shop.” It has earned its credibility by requiring members to publish science-based intermediate targets within 12 months of joining. The vast majority, including Allianz, have set intermediate targets for 2025 or 2030. With its collective $trillions in assets under management, the NZAOA is truly leading the way. It has pioneered methodologies for setting and reporting investment portfolio climate targets and works on sector and asset manager engagement. It shares information and publishes papers to help other investors on their respective net-zero paths, including on how to join forces with stakeholders, be they industry sectors, companies, or policymakers.  Transforming our economy is a huge growth opportunity. The UN-convened Net Zero Asset Owner Alliance is an invaluable partner for driving this transformation. I invite others to join us as members, supports, doers, and first-movers.