The following content is sponsored by MSCI.
A Visual Guide to 5 Types of Climate Indexes
If average temperatures continue to rise at their current rate:
- 10% of the world’s economic value could be lost by 2050
- A sea level rise of over 8 feet could flood coastal cities
- 420 million people could be exposed to extreme heat waves
To prevent the worst effects of climate change, climate experts believe we need to drive carbon emissions down to net-zero.
This infographic from MSCI shows five climate indexes that can help align investor portfolios to the goals of the Paris Agreement, mitigate emissions, and reduce fossil fuel exposure.
What is Net-Zero?
Net-zero targets are a clearly marked pathway for companies to reduce greenhouse gas (GHG) emissions in line with the Paris Agreement.
The Paris Agreement’s goal is to limit global warming to well below 2°C, preferably no more than 1.5°C above pre-industrial levels. Investors have a critical role to play in this transition to net-zero.
5 Types of Climate Indexes
First, here are the key metrics used to assess the environmental profile of indexes:
- Carbon emissions: Based on tons of carbon dioxide across all constituents divided by millions of dollars invested in the index (tons CO2e/$M invested).
- Carbon intensity: Based on tons of carbon dioxide per $1 million in sales (tons CO2e/$M sales).
Let’s look at five types of climate indexes from MSCI: