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.

Integrating sustainability and climate risk and impact into bond and private-debt analysis is becoming an increasingly important aspect of portfolio construction. This paper discusses a range of metrics that could guide investors in making these assessments.

With the market for sustainable (or labeled) bonds growing rapidly, we assessed their value relative to conventional bonds and found they consistently exhibited a green premium, or “greenium,” though it did diminish over time.

While examining use of proceeds remains a key element of analyzing green bonds, we highlight four additional metrics to assess these bonds and their issuers in a more quantitative way. They offer a new set of lenses with which to tackle the analysis.

Good emissions data is essential for any detailed sovereign-bond climate analysis. In this paper, we address some key questions around how best to quantify sovereign bonds’ financed emissions and climate-transition risk.

Agency residential mortgage-backed securities (RMBS) finance about 17% of U.S. residential greenhouse-gas emissions annually. We break down that number to help issuers and investors understand emissions sources and drivers behind agency RMBS.  

Our state-level analysis of carbon emissions for U.S. residential properties indicates strong regional differences in emissions and their drivers. Such data could improve understanding of emissions from holdings in mortgage-backed securities and property loans.

We take a look at how MSCI’s Total Portfolio Footprinting could provide an innovative way for investors to compare the financed-emissions of green and non-green bonds, helping them make better informed investment decisions.