Recognizing that the world is not on track to complete the Paris Agreement, TT International in its Beyond low carbon, towards holistic environmental investment The paper argues that the current low-carbon approach needs to be complemented by an environmental solutions strategy.
The paper argues that the majority of environmental assets are placed in low-carbon products, which, taken in isolation, are insufficient to deliver decarbonization and biodiversity enhancement, and may in fact be directly detrimental to these goals when they are overused.
In the paper, asset manager TT suggests that low-carbon portfolios have three main problems:
- They can include companies that demonstrate a commitment to reducing their carbon intensity, which is merely promises for the future rather than something tangible now.
- These include companies that use offsetting, which the planet can’t do much about before there are problems with monocultures and food production.
- They tend to favor sectors, such as technology, that are generally less carbon-intensive and therefore do not deserve a special low-carbon allocation.
- They tend to be dominated by consumer goods companies, which encourage excessive consumption that harms the environment.
Instead, TT advocates for an environmental solutions strategy that solves many of these problems by offering a lower cost of capital to companies that produce the goods, services and systems that will enable the planet to reduce greenhouse gas emissions. greenhouse and improve biodiversity.
“The scale of the environmental crisis facing our planet demands that asset allocators take bold and creative action,” said Harry Thomas, co-portfolio manager of TT Environmental Solutions Strategy at TT International. “One low-carbon investment in isolation is unlikely to be enough. Our thought leadership paper made the case for complementing a low-carbon approach with an environmental solutions strategy. »