10 April 2024

As the climate crisis intensifies, the call for expanded Paris-aligned opportunities grows louder. Investors have a vital role to play in driving capital towards sustainable solutions.

Investors are facing a critical juncture in the fight against climate change. As the world grapples with the urgent need to limit global warming to 1.5 degrees Celsius, Tabula Investment Management Limited (“Tabula”) is sounding the alarm for greater access to diversified investment strategies aligned with the Paris Agreement.

The recent UN stocktake on carbon emissions pledges paints a concerning picture. Most countries are not on track to achieve net-zero emissions by 2050, requiring trillions of dollars in capital to facilitate the green transition. Tabula emphasises the need for specialised funds directing capital toward renewables, infrastructure, energy efficiency, and carbon capture.

One key solution lies in Paris-aligned benchmarks (PABs), a critical component of the EU Green Deal. These benchmarks help investors steer clear of greenwashing and align with the Paris Agreement’s goals. To qualify for inclusion, an index must meet stringent greenhouse gas emission targets and incorporate screening processes to avoid investments in harmful industries.

Paris-aligned benchmarks

Paris-aligned ETFs offer investors a tangible opportunity to align their bond portfolios with climate goals while ensuring transparency and clarity in their investments. Jason Smith, Chief Investment Officer at Tabula, underscores the urgency, stating, “The world requires an annual investment redirection of $2.7 trillion to achieve the net-zero 2050 ambition. Investors need ways to allocate capital to projects supporting the green transition while offering attractive returns.”

Tabula CEO Michael John Lytle highlights the company’s commitment to providing solutions. “Tabula’s PAB ETFs cover a growing share of the fixed income market, offering convenient tools for investors looking to shift traditional passive allocations into more climate-friendly investments.”