Insights

State Street Sustainable Climate Bond Framework: Aligning With The Paris Agreement Goals

The scientific report underpinning the Paris Agreement was authored by the Intergovernmental Panel on Climate Change (IPCC) in 2014. The IPCC is an intergovernmental body mandated by the United Nations, tasked with providing an objective, scientific view of climate change and its political and economic impacts.

Fixed Income Portfolio Strategist
Head of Fixed Income Strategists, EMEA

The IPCC report explains in detail the relationship between increases in greenhouse gas (GHG) emissions and temperature levels. It provides a range of emission pathway scenarios with a key message that emissions must drop significantly over the next decade for the world to have a chance of staying within 1.5°C of global warming above pre-industrial levels, and thus avoiding the most catastrophic consequences of climate change.

In October 2016, the European Union formally ratified the Paris Agreement, which aims to strengthen the response to climate change, among other means by making investment flows consistent with a pathway towards low GHG emissions and climate-resilient development.

Yet, investors aiming to align their portfolios to the Paris Agreement goals have faced challenges in expressing the nuance of alignment credibility within a single temperature metric as well as recognising differences across sectors and markets.

To address these challenges, State Street Global Advisors has developed the State Street Sustainable Climate Bond Strategy. The strategy provides corporate bond investors with a framework to act now in aligning portfolio(s) with the climate transition opportunities and risks, and the goals of the Paris Agreement.
 

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