Sla over naar inhoud

Tools Used by System-Level Investors in Their Net-Zero Initiatives

Rapport
29-10-2024
Jon Lukomnik
System-level investors view climate change as a risk that directly impacts their portfolios, creating a fiduciary obligation to mitigate that risk where possible. This paper illuminates their common traits and the tools they use.

Introduction

This chapter examines the tools used by system-level investors in their journey to net zero. System-level investing (SLI)1 inherently focuses on the health of the environmental, social, and financial systems because they affect the capital markets, and so many system-level investors have adopted net-zero or other climate goals. This chapter examines some of the attributes of those investors and the tools they use.

System-level investors tend to be either large investors with liabilities (e.g., asset owners such as pension funds)—and, therefore, more concerned with total return than with market-relative returns—or early adopters with long-term investment horizons (e.g., some major asset managers and foundations). The twin hallmarks of SLI are the beliefs that (1) the general price level of the capital markets is based on the health of the economy and the environmental, financial, and social systems on which it relies and (2) the general price level of capital markets determines 75%–94% of the variability in an investor’s return, meaning that security selection and portfolio construction contribute only 25%, at most.2 

For these total-return-focused investors, beta is salient, which is quite unlike those seeking relative return success (alpha), for whom beta is silent. Modern portfolio theory assumes that beta is exogenous, but system-level investors do not. They try to affect it. Because beta risk is universal and nondiversifiable, risk management is not limited to the capital market tools used to diversify or hedge idiosyncratic, security-specific risk. Focusing on systemic risks means these investors act both in the capital markets and in the wider world to mitigate risks to the financial, environmental, and social systems, with reducing climate risk atop many system-level investors’ priorities list. 

We find several commonalities in these investors’ approaches.3

[....]

Lees verder op: CFA institute

Gerelateerde vacatures

Geïnteresseerd in een carrière bij organisaties in ditzelfde vakgebied? Bekijk hieronder de gerelateerde vacatures en vind de perfecte match voor jou!
Top vacature
ABP
Marktconform
Medior, Senior
Amsterdam/Heerlen
In deze functie draag je bij aan de vormgeving van het risicobeleid en voer je regie op de risicobeheersing met als aandachtsgebied vermogensbeheer. Door het systematisch monitoren en beoordelen van...
Top vacature
EY
Marktconform
Medior, Senior
Amsterdam
Deze rol als Accountmanager binnen Banking & Capital Markets bij EY omvat het ontwikkelen van klantoplossingen, adviserende verkoop, en relatiebeheer om klantrelaties te versterken en nieuwe zakelijke kansen te stimuleren.
Top vacature
Ennatuurlijk
4.575 - 6.710
Medior
Eindhoven
Wil jij als Investment Analist samen met ons helpen Nederland te verduurzamen? Krijg jij er energie van om voor projectenontwikkelingen een business case te maken om daarmee tot een succesvol...
Top vacature
Oost NL
5.800 - 7.600
Medior, Senior
Apeldoorn, hybride
Wil jij samen met ondernemers innovaties op het gebied van gezondheid versnellen? Dan ben jij de Investment Manager die wij zoeken. Als Investment Manager ben je verantwoordelijk voor het acquireren,...