Climate Champions are concerned with issues such as global warming, changes in weather patterns, and the impact of these shifts on people and the planet. You may want to explore investments that support, or are aligned with, the transition to a low-carbon economy and that seek to deal with the risks posed by climate change.

Why is it important to combat climate change?

According to the United Nations (UN), the world is on the brink of a climate catastrophe. As global temperatures rise, heatwaves, droughts and floods caused by climate change are already affecting billions of people around the world and causing potentially irreversible changes to global ecosystems.

To try to avert the worst impacts of climate change and preserve a livable planet, a growing number of governments and other institutions have pledged to cut greenhouse emissions to net zero. This means reducing emissions as close to zero as possible, with any remaining emissions removed from the atmosphere by natural sinks, or by artificial means. With the window for action closing rapidly, the UN’s Net Zero Coalition warns that emissions need to be reduced by 45% by 2030 and reach net zero by 2050.

The UN Sustainable Development Goals (SDGs) related to climate

In 2015, the UN adopted the 2030 Agenda for Sustainable Development, a blueprint for delivering peace and prosperity for people and the planet. At its heart are 17 Sustainable Development Goals (SDGs). You can use the UN SDGs to help direct investments towards the most pressing climate-related challenges.

The UN SDGs aligned to climate issues are:

• SDG 6: Clean water and sanitation
  Demand for water is rising. To ensure a sustainable and equitable distribution of water to meet all needs, the average global implementation rate of improved water resources management needs to double.

• SDG 7: Affordable and clean energy
  Hundreds of millions of people still lack access to electricity. Achieving energy and climate goals will require continued policy support and a massive mobilization of public and private capital for clean and renewable energy, especially in developing countries.

• SDG 13: Climate action
  Immediate and deep reductions in emissions are needed across all sectors to move from a tipping point headed to climate calamity to a turning point for a sustainable future.

How to invest if tackling climate change is important to you

Climate issues can be reflected in a diversified investment portfolio by choosing managers that use environmental, social and governance (ESG) metrics, and corporate engagement, to manage risks and identify opportunities as part of their overall investment process. This approach should include, where relevant, an assessment of how companies and issuers deal with broad climate-related challenges, such as carbon emissions, raw material sourcing and renewable energy usage.

Such an approach can help investors use their investments to contribute to the transition to a low-carbon economy and to help deal with the risks posed by climate change, while still having the potential to grow their wealth and achieve their long-term financial goals.

If more targeted exposure is required, investors can also seek investments with an explicit focus on factors linked to climate change, or that look to make an impact on specific climate-related issues – for example, by directly supporting the transition to cleaner energy technologies, improvements in biodiversity, or the move towards more sustainable agriculture.

Citations

United Nations. The Sustainable Development Goals Report. 2022,
https://unstats.un.org/sdgs/report/2022/The-Sustainable-Development-Goals-Report-2022.pdf

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