Continuous education is an important part of any professional investor’s career, particularly as times change so rapidly. Climate change has become the biggest issue facing investors, but what it means for portfolios and the transition to a lower-carbon world is less clear.
What challenges (and opportunities) will it bring? And why should we act now? Not knowing the answers to these important questions has put some financial professionals at a disadvantage in being able to explain it to others like clients and colleagues.
This module bridges that gap. Those participating in this course are invited to digest the information and then take the test at the end. To enhance the learning experience, the module is delivered using clear language, charts, a video and case studies. Each of the eight chapters takes up to 15 minutes to read.
A score of at least 12 out of 15 correct answers (80%) for the test will count as two hours towards your professional CPD requirements. The educational module is already accredited by local and global institutes, with more to follow.
The CFA Institute allows its members the ability to self-determine and self-report professional learning credits earned from external sources. CFA Institute members are encouraged to self-document such credits in their online PL tracker.
What is global warming and climate change?
Climate change caused by rising levels of CO2 in the atmosphere is seen as the greatest threat facing humanity.
How global warming causes life-threatening climate change
The momentum built by international protocols since the 1980s
The Paris temperature goals and the IPCC emissions targets
Using net zero pledges to combat climate change
Climate change can only be combatted by reducing greenhouse gas emissions, which has led to national carbon targets and net zero pledges.
How emissions cuts are vital to achieve the Paris goals
The importance of national targets and net zero pledges
How investors are tackling high emitters using engagement
Why climate change is relevant for investors
Climate change is an issue of ‘double materiality’ for investors, presenting both transition risks and opportunities that require pathways for change.
How double materiality combines top-down with bottom-up
The transition risks (and opportunities) that companies face
Why Paris alignment of investments can help meet goals
The obstacles to decarbonization
Decarbonizing a world that still relies on plentiful fossil fuels is not easy, while issues such as low carbon pricing and deforestation remain obstacles.
The uphill struggle in replacing coal, oil and gas with renewable energy
How carbon pricing is too low and not widespread enough to work yet
The cost of replacing infrastructure and the data dilemma in measuring emissions
What are the opportunities?
The biggest risk for investors in climate change lies in not seeing the opportunities, while moving to a lower-carbon economy will produce many winners.
How renewable energy offers the crown jewels in decarbonization
The rise of electric cars is part of a wider electrification drive
Green hydrogen is a solution, while carbon capture is expensive
A fiduciary responsibility to decarbonize?
Investors can play a huge role in assisting the low-carbon transition, through their ability to allocate money, and by using active ownership.
The need to steer capital towards companies committed to decarbonization
How ESG integration, voting and engagement can effect change
Why collaborations are increasingly successful in targeting high emitters
Climate investing solutions
There are many ways to invest in solutions to combat global warming, from thematic investments to more bespoke climate funds.
How themes such as renewables and electrification are attracting cash
The rise of impact investing, green bonds and environmental investing
A new wave of climate strategies that follow specific benchmarks
Many of the solutions for climate change are coming from private enterprise. Companies are developing alternatives to fossil fuels and innovative means of decarbonizing the world. Most of these are open to investors who want to make returns while also doing their bit to combat global warming.
Case studies for countries, sectors and companies
The transformation needed to combat climate change has already begun, and can be seen on a national, sectoral and corporate level.
How two countries have become world leaders in renewables
The engagement that brought change to the gas-guzzling auto sector
The companies taking decarbonization seriously in Asia and Europe
National efforts to replace fossil fuels with renewables lie at the heart of reducing global warming, since electricity generation accounts for 25% of all emissions.35 This is particularly important for coastal countries that will bear the brunt of rising sea levels if the issue is not tackled.
In this final chapter, we summarize the main points of what we have learned so far:
Ready for the test?
Now that you’ve learned the basics of climate investing, it’s time to test your knowledge. Below are 15 multiple-choice questions on the eight chapters you have completed. Click on the box that you think contains the correct answer. If you answer 12 or more questions correctly, you will be awarded two hours of CPD.Your feedback