The global average price of carbon must rise about five-fold by 2030 and seventeen-fold by 2050 if we are to meet the Paris climate goal. This implies an average compound annual growth rate across existing markets of between 22% and 35% between now and 2030.
The global average price of carbon must rise about five-fold by 2030 and seventeen-fold by 2050 if we are to meet the Paris climate goal
For investors, carbon instruments offer a unique set of benefits. They are a natural hedge against the adverse effects of climate policies on the earnings of many companies; many carbon markets contain in-built mechanisms to protect against inflation; and by offering returns with low correlation to major asset classes they can be used to diversify portfolios.
Yet, globally, portfolios are almost universally short carbon. Few investors take into account the real and serious risks that the climate transition brings, and many are exposed to the risk of a sudden carbon price “squeeze” should regulations and climate commitments tighten.
…we aim to capture the most attractive risk/return opportunities in this new set of assets that we believe will underpin the transition to a CLIC® economy
For investors, a detailed knowledge of the market is essential. Investing in carbon instruments entails navigating governmental, economic, and reputational risks, in addition to understanding the disruptive potential of new technologies. Through our careful monitoring and analysis of market, policy and technological developments, including through our proprietary Climate Value Impact framework, and with the employment of a flexible, actively managed strategy, we aim to capture the most attractive risk/return opportunities in this new set of assets that we believe will underpin the transition to a CLIC® economy.
The sustainability transformation will disrupt 95% of our investment universe. High-integrity carbon markets represent powerful mechanisms for investors to support the transition, and will be the cornerstone of what we believe is a once-in-a-generation investment opportunity.
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