onValues has in the past months intensified its support of clients wanting to align their portfolios with the Paris Agreement’s objective of limiting global warming to 1.5°C. We welcome the fact that investors’ focus is slowly but surely moving away from a backward-looking risk management to a more forward-looking consideration of both risks and opportunities involved in aligning own operations, products and supply-chains with a low-carbon future. We particularly encourage clients to use methodologies recommended by the Science Based Targets initiative, which provides a science-based framework to assess how the projected emissions of a company, its carbon strategies and targets translate into an implied temperature rise (ITR). We recognise the fact that ITR methodologies (and underlying data) are still far from perfect, but are confident that they will ultimately prevail because investors need simple metrics in order to effectively engage with portfolio companies.
Our founder, Ivo Knoepfel, has recently been appointed as chair of the Advisory Board of the Center for Sustainable Finance and Private Wealth (CSP), a research and teaching institution at the Department of Banking and Finance at the University of Zurich. CSP is unique in its position at the intersection of research and training, bringing together scientists, wealth owners, and investment professionals in order to generate knowledge and to mobilize capital toward impact. In the past years, CSP has trained hundreds of wealth managers and asset owners, with a particular focus on next-gens. Its ground-breaking research has helped understand the mechanisms through which asset owners can contribute positive impact in the real world. onValues is convinced that the critical voice of academia is needed to challenge the conventional wisdom of investors and improve impact investing practices, and is therefore proud to support CSP.
The International Energy Agency estimates that buildings and construction are responsible for nearly 40% of total direct and indirect CO₂ emissions worldwide, the largest contribution of all sectors. While much of the conversation is centred around reducing energy for heating, cooling and lighting of buildings (accounting for 28% of global CO₂ emissions), little attention is still being paid to the 11% of global CO₂ emissions caused by the manufacturing, transport, construction and disposal of building materials, also known as "embodied carbon". The share of embodied carbon tends to increase over time and it is therefore crucial to focus on solutions such as wood construction, recycled steel and low-carbon cement going forward if the world is to meet the Paris Agreement global warming goals.
At onValues we observe a trend towards higher allocations to real estate in our clients’ portfolios. We are therefore committed to helping our clients find ways to reduce the greenhouse gas intensity of this asset class, mainly by partnering with developers and asset managers that have set out to substantially reduce direct and indirect emissions in their portfolios and have defined clear targets for this.
Time is running out for averting catastrophic climate change. The recently released sixth report of the Intergovernmental Panel on Climate Change contains more precise and alarming predictions of expected climate disruptions based on direct observations of the changes already underway and on improved climate models. It is now clear that keeping the warming below 1.5°C, as laid out in the Paris agreement of 2015, would require the whole world, not just rich countries, to get net emissions of carbon dioxide down to zero before 2050 – a huge challenge for our political and economic systems.
In light of the urgency of the matter, we are assisting our clients in identifying ways in which their investments can support the alignment of our economies to a net-zero emission pathway. This includes forceful engagement strategies with large emitters in their portfolios, targeted investments in clean energy infrastructure and in carbon capture technologies, investments that enhance carbon sinks in soils and forests, and investments in companies providing break-through innovations.