The Asset Allocation into the Green Economy | Data on the Data | Refinitiv | Summary and Q&A

TL;DR

Investment in green technology is rapidly increasing, driven by asset owners and the understanding of climate change's impact on various industries.

Key Insights

• 💚 Green technology investment is being propelled by pension funds, asset owners, and the understanding of climate change's impact.
• 💚 The growth of the green economy has outperformed traditional equity markets, indicating a shift in investor preferences.
• 👨‍💼 COP26 is focused on achieving net zero emissions and is driving commitments from governments, businesses, and financial institutions.
• 🖐️ Reliable climate data is crucial for investors, and exchanges play a role in driving better data and disclosure.
• 💚 Consistency in taxonomies used to classify green revenue is needed to measure and report green exposure accurately.
• ✋ High carbon sectors need credible climate transition plans, and initiatives like Climate Action 100+ and the Transition Pathway Initiative provide consistent assessment and engagement frameworks.
• 😀 Companies with credible transition plans receive greater investment flows, while those without face potential divestment.
• 💚 Events and online platforms, such as the COP26 Investor Action on Climate series, provide valuable information on evolving trends in green technology investment.

Transcript

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Questions & Answers

Q: What is driving the momentum in green technology investment?

The momentum is being driven by pension funds and asset owners who recognize the disruptive impact of climate change on industries and the need for transition in higher carbon sectors.

Q: How does the growth of the green economy compare to traditional equity markets?

The growth of green economy industries has significantly outperformed the fossil fuel economy, as shown by the chart provided. This indicates a substantial flow of assets into green industries.

Q: What is COP26 and why is it important?

COP26 is the next big climate summit focusing on the trajectory to net zero emissions. It is crucial because it drives commitments from governments, businesses, investors, and financial institutions to set long-term targets and implement transition plans.

Q: What role do exchanges like the London Stock Exchange Group play in driving climate data disclosure?

Exchanges can help accelerate climate data disclosure by providing consistent guidance on climate reporting. The London Stock Exchange Group, along with other exchanges, is working on developing model climate guidance based on global standards. This will enhance data consistency globally.

Summary & Key Takeaways

• Investment in green technology has gained significant momentum, led by pension funds and asset owners.

• Climate change is causing disruptive shifts in industries like automotive and energy, leading to a need for transition in higher carbon sectors.

• COP26, the upcoming climate summit, is focused on achieving net zero emissions and is driving commitments from governments, businesses, investors, and financial institutions.