SMOG - The Road To Decarbonization Is Bumpy. Carbon Allowances Can Help
2023-03-11 23:21:00 ET
Summary
- Climate change poses many risks to society and industries, whether it’s elevated weather uncertainty and physical damage from global warming or business-model disruptions in the transition to a lower-carbon economy.
- When sizing carbon allowance allocation weightings, three considerations are important: which climate transition path is most likely to occur, the portfolio’s exposure to that scenario, and the investor’s tolerance to this risk.
- We think a nearly 2% allocation to carbon allowances is sufficient to protect the strategy in our base-case scenario.
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The Road To Decarbonization Is Bumpy. Carbon Allowances Can Help