Climate Metrics for Debt and Equity Portfolios: A Framework for Analysis

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Climate Metrics for Debt and Equity Portfolios: A Framework for Analysis

The Paris Agreement requires significantly increased efforts to reduce emissions in the short term and net zero emissions by the second half of the century. To meet the investment needs in green technologies and other emission reduction measures, both public and private financing is required at scale and needs to be applied in a mutually enhancing way. The transformation will include alternative sources of financing since long-term loans becomes scare after the financial crisis.  For the success of the transformation, it is therefore important that investments are compatible with long-term climate protection scenarios.

The report contributes by providing a conceptual framework of mapping climate metrics. The conceptual framework includes an inventory of existing metrics and classifies them according to two dimensions. As such, it helps to detect what kind of additional climate metrics are still required. Thus it is extending the notion about key design principles for climate metrics. In addition, the report contributes to that debate whether the influence of equity investors on ecological business strategy is bigger than the influence of debt investors as it develops a framework to reflect the consequences of the different positions. The report provides a numerical illustration of a number of the design characteristics that have been introduced and also includes a dynamic perspective in the light of the debate whether to account for debt and equity in a different way. The application of the framework to five hypothetical portfolios supports that equity and debt should not be treated fundamentally different.


Christine Grüning, Anne Michaels, Ulf Moslener, Menglu Zhuang
Release date: 
December, 2017
Number of pages: 
File size:
1.48 MB