2022 Climate Change Investing Outlook

Multiple authors
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The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.

Istrat insights

Integrating climate change into multi-asset portfolios

As we approach 2022 and the momentum behind decarbonization and net-zero objectives builds around the world, asset owners are increasingly engaged in addressing the investment implications of climate change. The focus thus far has largely been on implementation at the security- and manager-selection levels, but there is a growing recognition of the need to factor climate change into broader investment policy and asset allocation decisions.

Our Investment Strategy Team, in partnership with our Climate and ESG teams, has developed a framework for integrating climate change and its capital-market effects into multi-asset portfolios. We had a simple but important philosophical starting point for this work: We believe climate change impacts investment outcomes. It impacts macro-level variables, such as GDP growth and inflation; company-level dynamics, such as costs and future company activity; and decisions about regulation and fiscal policy. These, in turn, all impact asset prices.

The complexity of climate change and its effects requires a clear framework for systematically organizing, researching, and integrating climate change in multi-asset portfolios. Ours consists of three pillars:

Climate investing insights

Climate investing: Focus on adaptation, mitigation, and engagement

Climate change investing remains a top priority for the firm for 2022. In response to increasing challenges arising from climate change and growing client interest in climate solutions, we have expanded our climate investing offerings to include late-stage private equity, market-neutral (long/short) strategies, and adaptation-focused equities. Our broadening agenda for 2022 with Woodwell Climate Research Center may include research into biodiversity, forestry, agriculture, and new climate solutions. Finally, we plan to strengthen our efforts related to climate engagement, using our role as an active owner to encourage companies to improve climate reporting and disclosures and establish credible transition plans.

Authored by
Nick Samouilhan, PhD, CFA, FRM
Co-Head of Multi Asset Platform
Tim Antonelli, CAIA, CFA, FRM, SCR
Head of Multi-Asset Strategy – Insurance
wattiau patrick
Patrick Wattiau
Lead Researcher
chris goolgasian
Christopher Goolgasian, CFA, CPA, CAIA
Director of Climate Research
julie delongchamp
Julie Delongchamp, CFA
Climate Transition Risk Analyst
Alan Hsu
Portfolio Manager
Greg Wasserman, CFA
Head of Private Climate Investing
New York