How can climate indexes boost green investment?

The document outlines the role of climate indexes in guiding institutional investors toward net-zero carbon emissions and the goals of the Paris Agreement. It details five specific MSCI index types—Climate Paris aligned, Climate change, Low carbon target, Fossil fuels exclusion, and Environment indexes—each with distinct objectives ranging from reducing carbon intensity to excluding companies with fossil fuel reserves. The text highlights that these tools help investors mitigate transition and physical risks, capture green opportunities, and avoid the portfolio value erosion associated with global decarbonization scenarios.

• Climate indexes are designed to help institutional investors align their portfolios with the Paris Agreement's goal of limiting global warming to well below 2°C, and preferably 1.5°C, by reducing fossil fuel exposure and capturing green opportunities.
• MSCI offers five distinct types of climate indexes: Climate Paris aligned (aiming for 50% carbon intensity reduction vs benchmark), Climate change (30% reduction vs benchmark), Low carbon target (50% footprint minimization), Fossil fuels exclusion (removing companies with oil, gas, and coal reserves), and Environment indexes (selecting companies with at least 50% revenue from environmentally beneficial products).
• The Climate Value at Risk (Var) metric indicates that while a holder of MSCI ACWI could face a portfolio value erosion of approximately 14.44% under a 1.5°C warming decarbonization scenario, a holder of a Climate Paris Aligned Index would experience little to no erosion.
• Failure to limit temperature rises could lead to significant global impacts by 2050, including the loss of 10% of the world's economic value, the flooding of coastal cities due to sea level rises exceeding 8 feet, and the exposure of 420 million people to extreme heat waves.

APA

Neufeld, D. (2022). How can climate indexes boost green investment? World Economic Forum. https://www.weforum.org/stories/climate-action/climate-indexes-global-warming-investment-sustainability/

Chicago

Neufeld, Dorothy. How can climate indexes boost green investment? World Economic Forum, 2022. https://www.weforum.org/stories/climate-action/climate-indexes-global-warming-investment-sustainability/.

Wikipedia

{{cite report |last1=Neufeld |first1=Dorothy |title=How can climate indexes boost green investment? |publisher=World Economic Forum |date=7 February 2022 |url=https://www.weforum.org/stories/climate-action/climate-indexes-global-warming-investment-sustainability/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{neufeld2022how, author = {Neufeld, Dorothy}, title = {{How can climate indexes boost green investment?}}, institution = {World Economic Forum}, year = {2022}, month = feb, url = {https://www.weforum.org/stories/climate-action/climate-indexes-global-warming-investment-sustainability/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }