Decarbonizing Everything
Financial Analysts Journal, 2021, 77(3): 93-108. DOI: 10.1080/0015198X.2021.1909943.
17 Pages Posted: 7 Jan 2021 Last revised: 28 Aug 2022
Alexander Cheema-Fox
State Street Associates
Bridget Realmuto LaPerla
State Street Associates
George Serafeim
Harvard Business School
David Turkington
State Street Associates
Hui (Stacie) Wang
Fidelity
Date Written: January 28, 2021
Abstract
We analyze how the use of different climate risk measures leads to different portfolio carbon outcomes and risk-adjusted returns. Our findings are synthesized in a rules-based investment framework, which selects a different type of climate metric across industries and weighs industries in the portfolio based on the variability of carbon outcomes among firms within each industry. We conclude that analyzing the merits and applicability of various climate data can help investors manage climate risk while increasing risk-adjusted returns.
Keywords: climate change, investments, factor investing, ESG, environment, climate finance, decarbonization
Suggested Citation: Suggested Citation
Alexander Cheema-Fox
State Street Associates ( email )
140 Mount Auburn St
Cambridge, MA 02139
United States
Bridget Realmuto LaPerla
State Street Associates ( email )
One Lincoln Street
Boston, MA 02111-2900
United States
George Serafeim
Harvard Business School ( email )
Boston, MA 02163
United States
HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=15705
David Turkington
State Street Associates ( email )
United States
Hui Wang (Contact Author)
Fidelity ( email )
245 Summer Street
Boston, MA 02110
United States
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