MSCI Chief: Climate Change is an 'Existential Threat,' Urges Action
Thursday, Nov 14, 2024 6:26 pm ET
2min read In a recent statement, MSCI's Chief Executive Officer, Henry Fernandez, emphasized the urgency of addressing climate change, describing it as an "existential threat" to the global economy. As a leading provider of investment decision support tools, MSCI is taking a proactive stance in integrating climate change considerations into its investment decisions and risk management strategies.
Climate change is no longer a distant concern; it is a pressing issue that impacts businesses and investors today. The Earth has just marked its hottest year on record, with temperatures breaching the 1.5-degree Celsius threshold for preventing the costliest warming. Nearly 200 countries have pledged to triple reliance on renewable energy and double energy efficiency by 2030 to drive down demand for fossil fuels. An orderly path to net-zero by 2050 will require scaling up investment and strengthening policy.
MSCI's commitment to combating climate change is evident in its approach to risk management. The firm is integrating climate-related risks into its analytics and ratings, offering investors insights into transition risks, physical risks, and opportunities arising from the shift to a low-carbon economy. By considering these factors, investors can better manage long-term risks and identify resilient investment opportunities.
MSCI's Climate Value-at-Risk (Climate VaR) model, introduced in 2021, estimates the potential financial impact of climate change on companies and portfolios. It measures the expected loss from climate-related events over a given time horizon, considering physical risks (e.g., extreme weather) and transition risks (e.g., policy changes). This innovative tool enables investors to make more informed decisions about climate-conscious investments.
MSCI's Chief, Henry Fernandez, envisions a future where investors and financial institutions align their portfolios with the Paris Agreement's goals, driving a low-carbon economy. He advocates for policies that encourage a swift transition, such as carbon pricing, green financing, and public-private alignment. These policies would incentivize businesses to reduce their emissions and invest in clean technologies, making it easier to implement climate action.
MSCI's focus on understanding individual business operations is crucial in evaluating companies' climate-related initiatives. By delving into each company's unique strategies, MSCI can identify those that are genuinely addressing climate change, rather than simply paying lip service. This approach enables MSCI to provide more accurate and relevant insights to investors, helping them make informed decisions about climate-conscious investments.
In conclusion, MSCI's Chief, Henry Fernandez, has called climate change an 'existential threat' and urged investors to take action. By integrating climate change considerations into its investment decisions and risk management strategies, MSCI is helping investors navigate the challenges and opportunities presented by the transition to a low-carbon economy. As the global investment community becomes increasingly focused on sustainability and climate risk, MSCI's leadership in this area will continue to be invaluable.
Climate change is no longer a distant concern; it is a pressing issue that impacts businesses and investors today. The Earth has just marked its hottest year on record, with temperatures breaching the 1.5-degree Celsius threshold for preventing the costliest warming. Nearly 200 countries have pledged to triple reliance on renewable energy and double energy efficiency by 2030 to drive down demand for fossil fuels. An orderly path to net-zero by 2050 will require scaling up investment and strengthening policy.
MSCI's commitment to combating climate change is evident in its approach to risk management. The firm is integrating climate-related risks into its analytics and ratings, offering investors insights into transition risks, physical risks, and opportunities arising from the shift to a low-carbon economy. By considering these factors, investors can better manage long-term risks and identify resilient investment opportunities.
MSCI's Climate Value-at-Risk (Climate VaR) model, introduced in 2021, estimates the potential financial impact of climate change on companies and portfolios. It measures the expected loss from climate-related events over a given time horizon, considering physical risks (e.g., extreme weather) and transition risks (e.g., policy changes). This innovative tool enables investors to make more informed decisions about climate-conscious investments.
MSCI's Chief, Henry Fernandez, envisions a future where investors and financial institutions align their portfolios with the Paris Agreement's goals, driving a low-carbon economy. He advocates for policies that encourage a swift transition, such as carbon pricing, green financing, and public-private alignment. These policies would incentivize businesses to reduce their emissions and invest in clean technologies, making it easier to implement climate action.
MSCI's focus on understanding individual business operations is crucial in evaluating companies' climate-related initiatives. By delving into each company's unique strategies, MSCI can identify those that are genuinely addressing climate change, rather than simply paying lip service. This approach enables MSCI to provide more accurate and relevant insights to investors, helping them make informed decisions about climate-conscious investments.
In conclusion, MSCI's Chief, Henry Fernandez, has called climate change an 'existential threat' and urged investors to take action. By integrating climate change considerations into its investment decisions and risk management strategies, MSCI is helping investors navigate the challenges and opportunities presented by the transition to a low-carbon economy. As the global investment community becomes increasingly focused on sustainability and climate risk, MSCI's leadership in this area will continue to be invaluable.
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