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21 June 2022

Webinar

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Carbon Impact

THE TRANSITION RISK OF YOUR INVESTMENT

Climate change has become a concern for all! In this sense, we must act for a carbon-free world, requiring greener investments and less carbonated portfolio strategies

Several strategies have been implemented to achieve a prosperous, modern, competitive, and climate-neutral economy. In terms of climate policy, the EU has issued Carbon Permits in 2005. Since then, the increasing cost of the carbon emission related to emissions gives a measure of the “Transition risk” – the risk related to a shift toward a low-carbon economy. In Europe, Carbon emissions are a central part of SFDR reports required for articles 8 and 9 products.

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Transition Risk

Each company emitting greenhouse gases (GHG) has a liability that can be measured through the Carbon Permit price. AMINDIS R&D department developed a methodology* helping investment managers to measures the transition risk of their portfolio and identify the most exposed holdings.

*Published in the Journal of Performance Measurement

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How to improve your portfolio investment?

The actions that companies will put in place to mitigate climate challenges, cannot be perfectly known in advance. However, by focusing on low-emitting securities, AMINDIS's methodology measures the impact of over/underweighting carbon-emitting sectors and securities on the return of the portfolio. Our approach provides a better understanding of the challenges in the medium and long term of the low-carbon transition. 
 

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The methodology can be used for different purposes in the investment management process:

1.  Ex-ante risk assessment

2.  Portfolio optimisation by reallocating securities to lower 
     
the transition risk

3.  Stress testing

4.  Portfolio reporting (client and regulatory)

5.  Back testing the carbon reduction trajectory

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The only solution allowing you to solve the Impact, Risk, Return equation with a holistic view across all business functions for premium investment decisions!

Integrated system

Go further by easily adding other modules