Green Funds Largely Unaligned with Paris Agreement – S&P

While investors are increasingly switching to green funds to reduce their impact on the climate, those funds are struggling to align with the Paris Agreement’s targets to limit global warming, according to S&P Global Sustainable1. The group identified more than 300 funds that use green or environmental language in their names or to describe their approach and found that only about 12% are on track to meet the agreement’s goal of limiting warming to ‘well below’ 2°C. Of a subset of 51 funds that are specifically climate-focused, an even smaller proportion were found to be aligned. One in three green funds and climate funds are on a trajectory to overshoot a 3°C warming scenario, in which flooding, drought and sea level rise would pose severe risks to human life and society, the report said. As a comparison, S&P looked at a broad range of nearly 12,000 equity mutual funds and exchange-traded funds representing more than US$20 trillion in market value and found that about 11% were aligned with the Paris goals. 

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