FINANCIAL markets are among the most effective tools we have to fight climate change, and the net-zero transition will require trillions of dollars in annual investment between now and 2050, according to analysts.
While that’s certainly an impressive number, given specific climate exposure-related mandates, investors at this stage want to understand the risk and return dynamics reflected in a company’s environmental score. So, how can investors assess climate transition risk in their portfolios?
Both to answer this question and to better understand the relationship between stock returns and a company’s carbon emissions, I conducted a comprehensive analysis of MSCI Europe returns from 2007...
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