Avoiding the Tragedy of the Horizon

Designing effective portfolios for climate-related risk management and the transition to low-carbon economies

Director of Research
ESG Investment Strategy & Research

Bank of England Governor Mark Carney’s Tragedy of the Horizon speech brought renewed focus to a subject that we've been researching for many years — that of climate-related investing. In this paper, we summarise some of our latest thinking and insights on how best to design portfolios to manage climate related risks and the low-carbon energy transition.

Increasing evidence of climate change combined with increased regulatory action have been generating rapid innovation in climate investing. Now no longer confined to small satellite allocations in their portfolios, investors are seeking integration methods at the total portfolio level.