Climate risk and impact: the key is in scope 3 - Redington

Current emissions data tells us there’s often a trade-off between emissions and impact. But is this a real trade-off, or is it a perception driven by incomplete data?

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... Earlier this year, Redington researched impact opportunities within public equity strategies. Their aim was to find managers who are experts in identifying companies that are delivering meaningful solutions to our environmental crisis (such as solar glass manufacturers, waste treatment facilities and battery producers).

However, it became apparent these high-impact companies are often high emitters, since sectors where change is most urgently needed, and where more compelling impact opportunities present themselves, are often carbon-intensive (such as industrials, utilities, and materials).

This meant when running a simple carbon emissions footprinting comparison (scope 1 and 2) versus the MSCI World, the portfolios didn’t look as expected. So, the question is, is there really a trade-off between emissions and impact, or can this be explained by shortfalls in the data?

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