MSCI in practice: Managing your portfolio’s carbon footprint and understanding the impact of changing market conditions

In order to comprehend and gauge the carbon footprint of a portfolio as well as its fluctuations over time, a fundamental underpinning is established. This foundation serves as the basis for regulatory reporting, engagement with stakeholders, evaluations of climate-related risks, and the formulation of climate strategies and initiatives.

Alterations in the carbon footprints of portfolios can stem from a variety of sources. These include shifts in climate-related variables, adjustments made to the portfolio’s balance, or changes in financial variables.

This upcoming event will center around an illuminating conversation about a framework for attributing the carbon footprint. This framework serves to allocate alterations in emissions at the portfolio level to their core drivers. These encompass transformations in the portfolio’s composition, shifts in emissions from the entities within the portfolio, and alterations in the structure of ownership and financing. The purpose of this framework is to empower investors with insights into the extent to which modifications in a portfolio’s carbon footprint can be attributed to the inherent decarbonization initiatives of companies, the investment choices of portfolio managers, or shifts in the financing landscape of these companies.

Furthermore, the event will present an investor’s perspective, emphasizing the indispensability and significance of attributing carbon footprints. This perspective will shed light on why understanding the sources behind changes in carbon footprints is not just a choice, but an imperative in the current landscape.