CFA Institute has released a report on climate change analysis, which includes a set of recommendations to help guide investors to incorporate it into their investment process.
Climate Change Analysis in the Investment Process examines the “issue of climate change”, offers a discussion on the “physical and transition risks” caused by climate change and considers carbon markets, along with a set of current resources and best analysis practices available to investors and a series of case studies.
The report also lays out recommendations that the CFA Institute makes to investors and policymakers to help integrate climate change analysis, which includes a price on carbon and carbon price expectations to be included in analyst reports. Increased transparency and disclosure on climate metrics is also recommended.
The CFA Institute notes that the industry seems to be coalescing around bout the Sustainability Accounting Standards Board and the Task Force on Climate-related Financial Disclosures standards for such disclosures.
Investors are advised to engage with companies on the physical and transition risks of climate change but further education within investment management is also needed, according to the report. Read the full report.
It should be noted that the CFA Institute is not currently a member of the Race to Zero campaign. It remains to be seen how their strategy will evolve.
Find out how to join the Race to Zero here.