Forthcoming
Article
Financial Analysts Journal

Decarbonizing Everything

By: Alex Cheema-Fox, Bridget LaPerla, George Serafeim, David Turkington and Hui (Stacie) Wang

Format:Print

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 Risk; Esg; Esg (environmental, Social, Governance) Performance; Esg Disclosure; Esg Disclosure Metrics; Esg Ratings; Investing; Investing For Impact; Investment Strategy; Environment; Decarbonization; Climate Change; Environmental Sustainability; Environmental Management; Environmental Accounting; Investment; Strategy; Investment Portfolio; Investment Return

Citation

Cheema-Fox, Alex, Bridget LaPerla, George Serafeim, David Turkington, and Hui (Stacie) Wang. "Decarbonizing Everything." Financial Analysts Journal (forthcoming).