IAPF Spring 2018 Irish Pensions Magazine

IRISH PENSIONS MAGAZINE | SPRING 2018 | 13 EXPERT OPINION Dashboard suggests we are heading for a rise closer to 4° than the 2° commitment global leaders made when they signed the Paris climate change agreement in 2015 (see Figure 4), leaving the door open to more disruptive change in the future. Tracking an issue is one thing, measuring and managing the risks created isanother. Wehavedeveloped a range of tools to gauge the financial impacts of faster decarbonisation. For instance, our Carbon VaR model provides a measure of the impact of far higher carbon prices on corporate cash flows 4 . The wider investment industry continues to focus on carbon footprints, despite their limited relationship to financial impacts. Our analysis implies that a fifth of the profits generated by the world’s quoted companies could be at risk. Tools like the Climate Progress Dashboard and Carbon VaR are helping our investment teams to adopt a much more rigorous and 4  More details of the methodology are published at http://www.schroders.com/en/lu/professional-investor/ featured/climate-change-dashboard/carbon-var/ Figure 4: The signals on warming are still flashing red Please visit http://www.schroders.com/en/lu/professional-investor/featured/climate-change- dashboard/ for more details on methodology and sources. Dashboard updated using latest data at start January 2018. ww.schroders.com/en/lu/professional-investor/featured/climate-change-dashboard/ for more details on methodology and sources. Dashboard updated usin 2018. 4: The signals on warming are still flashing red Option 1