Instant Karma Newsletter 8.6.20
  • A step-by-step guide for investors of all sorts to set portfolio targets that will help create stronger decarbonization plans to reach the net zero emissions goal set by the Paris Climate Agreement for 2050.  

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It’s like the IKEA instructions of decarbonization plans: a global group of institutional investors representing about 20% of the world’s assets released the first phase of their practical, step-by-step blueprint for getting to net zero emissions by the Paris Climate Agreement’s 2050 deadline. 

What makes this announcement different from other commitments (like the one on “stakeholder capitalism” from last year’s Business Roundtable) is that it’s not merely a mission statement. It tells investors exactly what to do to prevent catastrophic climate change. The framework’s authors, led by the Institutional Investors Group on Climate Change (IIGCC), lay out concrete targets at the portfolio and asset class level as well as tools for measuring and reaching them — including the pros and cons of divesting from fossil fuels, as many climate activists demand, and leveraging one’s shareholder position to change polluter behavior. 

The phase now out for feedback and consultation covers listed equities, credit, sovereign debt, real estate and strategic asset allocation. A later phase of the framework will look at private equity and infrastructure. Whether the framework will be adopted by the asset managers and their $16 trillion in assets under management is not yet clear — but from now on, no investor can plausibly say that they don’t know how to decarbonize. 

In Other News: Alphabet bonds, BP dividend cut

More than half of Google parent Alphabet’s $10 billion bond offering is earmarked for climate and social justice investments. BP is tying its dividend cut to a longer-term transition to renewable energy. Bollywood actors are increasingly investing in Indian startups as the country’s impact investing leaders look at a blended finance approach to supporting the hard-hit informal employment sector. The coronavirus is confounding the robots. Two married Morgan Stanley executives explain how Wall Street needs to change if it wants to attract more Black bankers. 

Levity Break

Scrolling through the Conde Nast Traveler Readers Choice Award Winners is ASMR for the eyes of this grounded travel junkie.