It’s climate week in The Big Apple! And the perfect time to take a look at different investment approaches to a low-carbon transition. We talk through financial risks and opportunities for companies, transition funds, and how the things are playing out in bond markets.

A key aspect of controlling climate change is the energy transition. We bring in experts from MSCI ESG Research and Cohen & Steers to see what progress has been made and to discuss the associated risks and opportunities.

Climate is no longer just a risk for the future but also an opportunity to invest now, stressed speakers at our Capital for Climate Action EMEA Conference, which brought together investors and financial institutions to discuss the importance of investment and finance in speeding the low-carbon transition.

COP28 concluded with an agreement for countries to transition away from fossil fuels, marking a historic pivot away from the primary sources of energy that have powered society for nearly 200 years. How can countries — and investors — address these goals? 

Attendees at the recent MSCI Canadian Institutional Investor Forum discussed and debated the challenges and opportunities created by massive structural, macroeconomic, societal and technological shifts in the investment landscape.

Some say oil demand is soon to peak. Well, if that is true, why are some oil and gas producers growing their reserves? If there is uncertainty on how oil will perform in the future, how are oil and gas companies positioning themselves amid an ambiguous low-carbon transition? We try to answer these questions on this episode of ESG now.

This week, we are returning to five stories we have already covered to see what progress has been made (if any!): The Adani Group and its attempt to address a short seller report that questioned the group’s governance that led to a massive loss in market share; the United Auto Workers strikes and the continued struggle in the auto industry; the Inflation Reduction Act and the trillions of dollars of capital is supports; what the EPA’s methane rule has done for the gas industry in the US; and how Exxon has changed after having three seats of its 12 member board taken by over by Engine No. 1, an activist investor worried about carbon emissions.

As the urgency of addressing climate change continues to grow, investor engagement could be key to holding companies accountable for their environmental impact and influencing corporate climate strategies and net-zero commitments. 

MSCI’s Capital for Climate Action Conference brought together leaders from a diverse group of global organizations to untangle the latest developments in the net-zero transition. Here are some of the biggest takeaways. 

Are you aware of how much progress we are making on addressing climate change? There are all-these-pledges and all-these-plans made by companies, but have those plans been useful? Are they actually making progress on cutting emissions or are they just saying, “yeah we care about it, and we will do….something.” And what are those “somethings?” Are they far away technologies that can suck the bad stuff out of our atmosphere like a sort of techno-savior? Or something else? We answer those questions on this episode of ESG now.

Climate-friendly policies and regulations and the massive reallocation of capital needed in the coming years to ensure a successful shift to a net-zero economy should continue to expand the range of opportunities for both companies and investors.

Engagement, in tandem with capital allocation, is a key lever for institutional investors who wish to pursue net-zero targets.

The U.S. Inflation Reduction Act has ignited interest in developers of clean tech and low-carbon solutions. But what do the differences in the abilities of these firms to manage financially-relevant social and governance risks imply?

COP27 underscored the need for action on corporate climate pledges, the importance of data and a series of initiatives to spur public and private investment for developing countries. We review some of the key developments for companies and investors.

An increasing number of institutions have started to disclose climate-related risks and opportunities in alignment with TCFD recommendations. MSCI ESG Research data and metrics can be used at the portfolio, sector and security level to support the TCFD reporting framework.

Among the devastating effects of the Russia-Ukraine war is the potential to derail the world from its already difficult path to net-zero. We analyzed how the war could affect the world’s carbon emissions and decarbonization efforts — and investors.

This week we saw a landmark win for labor as Amazon workers on Staten Island voted to unionize. The decision and others like it at Starbucks and REI gave us a chance to explore unions from an ESG perspective. Then, we touch on some of the important findings in the recently published IPPC Climate Change 2022: Mitigation of Climate Change report.

Europe’s search for energy sources outside of Russia may slow the low-carbon transition in the short term. Staying within a net-zero cumulative emissions budget would mean fewer emissions later. What might this path mean for investors’ portfolios?

The SEC proposed requirements for U.S. companies to disclose certain climate-related risks, beginning in 2024. To assess whether companies are prepared to meet these requirements, we looked at the emission-disclosure rates of a large sample of U.S. equities.

A USD 1 trillion deal is scheduled to be signed into law by US President Biden on Monday, November 12. The deal, in the White House’s words, is imperative for the US to meet its commitment to reduce U.S. emissions by 50-52% from 2005 levels in 2030, create a 100% carbon pollution-free power sector by 2035, and achieve a net-zero economy by 2050. It allocates funds toward updating the US transportation system, its energy infrastructure, its climate resiliency, and its water system. We discussed how these plans move from the political stratosphere to the more habitable land of economic stimulus.

While investors around the world are committing to bring the carbon footprints of their portfolios to net-zero by 2050, figuring out how to do so is not a simple matter. What alternatives do investors have?

Investors have a key role in keeping global warming well below 2°C. We examine four strategic levers that investors can use to accelerate companies’ decarbonization: a shift of capital, active stewardship, financing of low-carbon solutions and policy advocacy. 

In the world of climate mitigative energy sources, natural gas lives in an uneasy balance. It is viewed by some as a bridge from heavy polluting fossil fuels to lower-emission sources, while others see it as a much more pollutive source than advertised. This is because of the issue of flaring, venting, and fugitive methane emissions along the natural gas supply chain. We discuss the new regulations that are coming to prevent methane emissions that are likely to impact oil and gas companies, and the attempts by some companies to make carbon neutral natural gas sources. Then we discuss the two devastating floods in Germany and China, and what it means for our world’s critical infrastructure.