Only 1.5% of investment funds align with Paris Agreement

Only 1.5% of global investment funds are aligned with the 1.5ºC scenario as agreed in the 2015 Paris accord, while as good as none are aligned when scope 3 is considered. 

That is the conclusion of new research seen by Net Zero Investor, which looked at over 23,000 funds worldwide, totalling more than $25 trillion in assets.

The Clarity AI analysis shows that less than 1,000 funds, or 1.3% of the total assets under management, were Paris-aligned, below the 1.75º C bucket, based on the targets of investee companies. 

Over 70% of all assets exposed are invested in funds above 2.3ºC, the findings claimed. 

When Scope 3 is considered, less than 0.1% of assets are Paris aligned and over 85% of assets are above 2.3ºC based on the targets of funds’ investee companies.

The research was conducted was based on implied temperature rise (ITR) metrics which measured the ambition of corporate emission reduction targets.

The company temperature scores were aggregated at fund portfolio level using a financed emissions weighting approach, meaning that each portfolio constituent’s individual temperature score was weighted by its portfolio share of financed emissions. 

For the calculation at least 60% of the portfolio value had a temperature score, the average portfolio coverage ratio was 86%.

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