{"id":16006,"date":"2017-05-04T16:09:14","date_gmt":"2017-05-04T14:09:14","guid":{"rendered":"https:\/\/preprod.i4ce.org\/publication\/how-should-financial-actors-deal-with-climate-related-issues-in-their-portfolios-today\/"},"modified":"2022-10-07T16:28:22","modified_gmt":"2022-10-07T14:28:22","slug":"deal-with-climate-related-issues-in-portfolios-today","status":"publish","type":"publication","link":"https:\/\/staging.i4ce.org\/en\/publication\/deal-with-climate-related-issues-in-portfolios-today\/","title":{"rendered":"How should financial actors deal with climate-related issues in their portfolios today?"},"content":{"rendered":"<h3>Financial institutions face\u00a0climate-related issues<\/h3>\n<p>Certain constraints, differentiated according to business lines, currently limit the ability of financial institutions to carry out on their portfolios a quantified forward-looking analysis based on scenarios. Nonetheless, these institutions as of today should \u2013 and can &#8211; begin to put in place the basis for management and reporting strategies to support alignment with a 2\u00b0C pathway. Various organisations \u2013 such as NGOs, extra-financial rating agencies, consulting firms and specialised service providers \u2013 are developing \u2018Climate\u2019 indicators, intended to enable financial actors to assess and address climate-related transition issues. Using one type or combination of such indicators is an initial step that will facilitate the integration into their processes of quantitative indicators of impact of the low-carbon transition on financial performance.<\/p>\n<p>\u201cClimate\u201d indicators can be grouped into five main categories: carbon footprint indicators; \u201cESG\u201d type qualitative indicators; \u201cgreen share \/ brown share\u201d indicators; \u201cphysical\u201d carbon footprint indicators; and indicators of alignment with a low-carbon or 2\u00b0C pathway. Each type of indicator presents advantages and drawbacks and their relevance depends on the business lines and on the specific objectives of the financial institution.<\/p>\n<p>Climate Brief 46 presents the most promising avenues of analysis for different financial business lines depending on their specificities. Broadly speaking, financial players should begin as of now to analyse their climate-related issues in a forward-looking manner based on semi-quantitative indicators.<\/p>\n<h3>Two types of currently available indicators seem particularly relevant<\/h3>\n<ul>\n<li><strong>indicators of alignment with a 2\u00b0C pathway:<\/strong> these macro-indicators aggregate both quantitative indicators based on historical data when available, and qualitative forward-looking indicators. On one hand, they can measure, for example the current exposure to the introduction of a carbon price. On the other hand, they can give a forward-looking analysis of a company\u2019s \u2018resilience\u2019 in a low-carbon economy given its ability to adapt itself to a regulatory and market environment in transition;<\/li>\n<li><strong>indicators of \u201cgreen shares\u201d and \u201cbrown shares\u201d:<\/strong> these indicators inform financial actors of a company\u2019s current distribution of revenues between \u201cgreen\u201d activities that will be favoured and \u201cbrown\u201d activities that will be penalised by the low-carbon transition. These indicators, once aggregated in terms of outstanding amounts, enable a financial institution to measure its exposure to companies that are heavily exposed to transition risks \u2013 as well as those that stand to benefit from the transition. These indicators, however do not alone make it possible to measure the extent of the potential losses or gains, but may be progressively refined into shades of \u201cgreen\u201d and \u201cbrown\u201d.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Financial institutions face\u00a0climate-related issues Certain constraints, differentiated according to business lines, currently limit the ability of financial institutions to carry out on their portfolios a quantified forward-looking analysis based on scenarios. Nonetheless, these institutions as of today should \u2013 and can &#8211; begin to put in place the basis for management and reporting strategies to [&hellip;]<\/p>\n","protected":false},"featured_media":49202,"template":"","meta":{"_acf_changed":false,"inline_featured_image":false},"type_publication":[50],"class_list":["post-16006","publication","type-publication","status-publish","has-post-thumbnail","hentry","type_publication-climate-brief"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How should financial actors deal with climate-related issues in their portfolios today? - I4CE<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.i4ce.org\/en\/publication\/deal-with-climate-related-issues-in-portfolios-today\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How should financial actors deal with climate-related issues in their portfolios today? - I4CE\" \/>\n<meta property=\"og:description\" content=\"Financial institutions face\u00a0climate-related issues Certain constraints, differentiated according to business lines, currently limit the ability of financial institutions to carry out on their portfolios a quantified forward-looking analysis based on scenarios. 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