YOU might have missed it, but last week in Egypt there was a big meeting discussing the future of the world.
Amid war, floods and endless news from China, the 27th UN Climate Change Conference of the Parties (or “COP27”) didn’t get the same headlines as last year’s COP26.
So what was decided at COP27 – and does it matter for investors?
The big announcement was a fund to help developing nations respond to the loss and damage associated with climate change. This has taken three decades to agree to.
Bigger polluters – rich countries and potentially China and oil-producing countries – will compensate poorer countries that pollute less.
Countries that are net exporters of carbon – including Australia – are asked to use some of the money they’ve gained to help those most affected.
Some are calling for this logic to be applied to companies as well as countries.
Heavy emitters, such as fossil fuel companies, could be forced by policy-makers to channel revenue into mitigation efforts.
There are three options for high-emitting companies:
What does that mean for investors?
This has obvious implications for investors.
If the logic is high emitters bear responsibility for mitigating the impacts of climate change, this adds credit risk. Therefore investors need to be aware of the implications of policy changes.
Find out about
Regnan Credit Impact Trust
Credit ESG analyst Murray Ackman joined Pendal’s Income and Fixed Interest team in 2020 to provide fundamental credit analysis and integrate Environmental, Social and Governance factors across credit funds.
Murray has worked as a consultant measuring ESG for family offices and private equity firms and was a Research Fellow at the Institute for Economics and Peace where he led research on the United Nations Sustainable Development Goals.
Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia.
The team’s awards include Lonsec’s Active Fixed Income Fund of the Year (2022) and Zenith’s Australian Fixed Interest Manager of the Year (2020).
Regnan Credit Impact Trust is a defensive investment strategy that puts capital to work for positive change.
Pendal Sustainable Australian Fixed Interest Fund is a defensive Australian bond fund that delivers market-leading performance with positive environmental and social outcomes.
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