What is the contribution of the corporate world to global warming?

Looking at the growth in revenues and dividend payments to public companies, it is clear that these companies need to review the temperature of their portfolio.

Politicians around the world are pushing investors to pay attention to their actions by adapting them to the Paris Climate Agreement, signed in 2015. The basic idea of ​​the Paris Agreement is to limit the rise in global temperature below 2 degrees Celsius, possibly to 1.5 degrees Celsius, to avoid the catastrophic effects of warming.

The vanguard of insurance and pension funds, many of which will attend the Davos Forum this week, points out that there is a new “temperature measurement” that provides a brief overview of how their investments contribute to climate change.

The temperature rating in question is a new method for quantifying the extent to which companies around the world are contributing to the rise of global temperature through their operations, according to the Arabesque organization on their website.

Such a measurement can help the funds in question redirect their capital from highly polluting sectors of the global economy to greener ones.

So far, the temperature indicator has only been adopted by a handful of financial institutions around the world, but its popularity is growing.

“There is still much work to be done, but it is encouraging that we, as an industry, are forced to answer this question about temperature measurement”, says Mark Lewis, head of sustainability studies at BNP Paribas Asset Management. “If you think you used to be able to ignore climate change, you can no longer do that”, added he.

In terms of the survey, France leads with a total of 18 companies, including the insurer AXA, which disclose their “temperature rating” in part or all of assets for 2018.

UK regulators have indicated that they may require some banks and insurance companies to present their results from 2021 onwards in their annual stress tests.

Asset management company Standard Life Aberdeen, German reinsurance company Munich Re, as well as Swiss Swiss Re and Zurich Insurance, have told that they are discussing the introduction of temperature estimates for their assets.

Temperature valuation is one of several investor-led initiatives that have emerged in recent years against the backdrop of mounting political pressure on the financial industry for the climate.

The Climate Change Institutional Investors Group, a European organization comprising predominantly pension funds and asset management companies, with 30 trillion EUR common assets under their leadership, launched a similar initiative last May to find a way to pursue the objectives of the Paris Agreement.

The “Net-Zero Asset Owner Alliance” was then singled out at the UN Climate Summit in September. The group, which has so far been joined by 16 insurance companies and pension funds with combined assets of nearly 4 trillion USD, also promised to bring its investments to the Paris Agreement.