Chart 11 shows the potential future carbon intensity trajectories for CBS, CBS and the top panel, as well as the impact of the underlying repository emission curve on the relative carbon intensity reduction that will be required for CBS and PABs (lower panel). Note the initial 30% and 50% emission reductions from the underlying reference value for the CTB and PAB versions. “To leave the Paris Agreement is to hand over the mantle of international climate leadership to China, Germany and other countries,” Senator Edward J. Markey (D-Mass), a leading supporter of a Green New Deal, said in a statement. “If we leave the Paris Agreement, it means that the path we must follow to stop the climate catastrophe will lead to higher temperatures, more superstorms and forest fires, more climate displacement – and we simply don`t have time to delay or distract ourselves.” This is all the more important because a transition to a world of 1.5oC is likely to require an absolute reduction in global greenhouse gas emissions. In addition to an initial 30% and 50% reduction in CO2 emissions from the underlying CBS and CBS index, the EU`s proposed minimum standards require a 7% self-defuel over the previous year. This objective has nothing to do with the emission curve of the underlying repository. This means that at some point, the exact decarbonization of the index from the benchmark index is unknown. This is why the minimisation of the active share helps to reduce the effects of absolute decarbonisation – which is necessary to rely on a net zero emission trajectory (i.e. a 1.5oC scenario) by 2050 – to tracking errors. So far, climate-conscious investors have largely focused on reducing relative CO2 emissions from portfolios, but different methods have made fertile ground for so-called “greenwashing.” Point-in-time analyses are certainly not necessarily an indication of alignment with our necessary transition to a low-carbon economy. However, a combination of revolutionary new datasets and indexing innovations is emerging. Investors now have the choice to align themselves with a scenario that can mitigate the most disastrous effects.
The European Union (EU) is in the process of finalising standards for the definition of a climate transition repository (CTB) and a Paris repository (PAB), both of which apply absolute measures to adapt to a management at 1.5oC rather than a relative reduction in CO2 emissions.2 Our S-PPATTM: Paris-Adline – Climate Transition Indices offer a powerful set of investment solutions to meet the proposed standards. , in addition to other climate targets.