Listen to our latest Intech® Equity Market Observations Watch Now

Please Choose Your Country

Welcome. This website is intended solely for the use of institutional investors, consultants and other professionally recognized financial intermediaries in specific countries. Intech Investment Management LLC (“Intech”), is an investment adviser registered with the United States Securities & Exchange Commission. Intech is not permitted to offer products and services in all countries. It is the responsibility of prospective investors to inform themselves of and to observe all applicable laws and regulations of any relevant jurisdictions, including the legal requirements and tax consequences within the countries of their citizenship, residence, domicile and place of business with respect to the acquisition, holding or disposal of shares or securities, and any foreign exchange restrictions that may be relevant thereto. The products and services referred to in this website are not offered to any person or entity in any jurisdiction where the advertisement, offer or sale of such products and services is restricted or prohibited by law or regulation or where we would be subject to any registration or licensing requirement not currently held by Intech or our affiliates. If Intech does not offer a website for your country, please visit www.janushenderson.com.

For U.S. and Canadian Institutional Investors Only

Not your country? Please choose your country here.

Information contained in this area of the Website is published solely for general informative purposes and intended only for United States institutional investors, consultants, registered investment advisers (RIAs), financial advisers (FAs), and other financial intermediaries who are knowledgeable and experienced in the financial services market and investment products. If you are a retail or individual investor then please leave this website. The information is not authorized for use in a jurisdiction where distribution is not authorized and is not intended for distribution to individual retail clients. If you choose to access this Website from locations outside of the United States, you do so at your own initiative and risk, and are responsible for compliance with all applicable laws.

U.S. Institutional Investors: By accessing this site, you confirm that you are an U.S. institutional investor as set forth in one of the categories described above, agree not to forward or make the contents of this site available to any person who is not an U.S. institutional investor, and agree to be subject to intechinvestments.com terms of use.

Canadian Institutional Investors: By accessing this site you confirm that you are a “permitted client” as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations of the Canadian Securities Administrators, you agree not to forward or make the contents of this site available to any person who is not a “permitted client”, and you agree to be subject to intechinvestments.com terms of use. The information on this Website is for informational purposes only and does not constitute (i) an offer for products or services or (ii) the provision of investment advice of any kind, tailored or otherwise. The information on this Website should also not be construed as an offer to sell or a solicitation of an offer to buy to any persons who are prohibited from receiving such information under the laws applicable to their place of citizenship, domicile or residence. Intech Investment Management LLC (“Intech”) does not have any funds that offer securities under a simplified prospectus for general offer or sale within Canada. No securities regulatory authority in Canada has reviewed or in any way passed upon this website or the merits of any investment available, and any representation to the contrary is an offense. Intech is registered with the United States Securities & Exchange Commission under the Investment Advisers Act of 1940. Intech is a subsidiary of Janus Henderson Group plc, and is affiliated with its subsidiaries and affiliates.

Decline - Redirect me to janushenderson.com

The 2021 United Nations Climate Change Conference—known as COP26 for short—came to a close this past weekend in Glasgow, Scotland, with a mix of promises and commitments from world leaders on how they plan to address climate change moving ahead.

As a backdrop, this was the 26th global climate summit with the countries that signed the original United Nations Framework Convention on Climate Change treaty in 1994. It took place six years after approval of the Paris Agreement, which outlined for the first time the united global goals of: 1) striving to limit global warming to below 1.5 degrees Celsius and 2) achieving net-zero carbon dioxide (CO2) emissions by 2050.

The 2021 Glasgow Climate Pact—the outcome of this most recent conference—represents important progress in the climate change fight. However, it certainly doesn’t eliminate the problem of global warming and includes a range of compromises that have frustrated many climate policy advocates. Still, in our view, it helps to move the climate change needle in a meaningful way.

Below are three of the summit’s key takeaways from an asset management perspective:

1. Pledges Have Become More Actionable.

The pact reaffirms the temperature and net-zero goals of the Paris Agreement. However, this time around, countries and private sectors also included a much clearer roadmap of how they plan to get there.

The most notable efforts were pledges to slash methane emissions and help better protect the world’s forests. After CO2, methane is the largest greenhouse gas, and although it begins to break down relatively quickly, it traps much more heat when first released into the atmosphere. In an effort led by the U.S. and the European Union, more than 100 countries agreed to reduce methane emissions by 30% by 2030. There was also a landmark agreement to end and reverse deforestation by 2030 by more than 100 nations, notably including Brazil, Russia, and Indonesia, homes to some of the world’s largest remaining forests.

In addition, more than 40 countries agreed to a UK-led pledge to phase out coal power in developed economies sometime in the 2030s and in developing economies in the 2040s. On the plus side, signatories included major coal-consuming countries such as Chile, Poland, and Vietnam, though Australia, China, India, and the U.S., all among the largest coal-users in the world, failed to sign on to the deal.

One of the clear themes from the summit was how to help capitalism “go green,” recognizing the importance of the private sector to help combat climate change. For example, a group of governments and automakers pledged a 100% transition to zero-emission new car sales by 2035 in major markets and by 2040 worldwide. While the world’s biggest auto markets, including China, Germany, Japan, and the U.S., were absent from the agreement, it notably included a number of large automakers, such as Ford and General Motors.

One of the clear themes from the summit
was how to help capitalism
“go green,”
recognizing the importance of the private sector
to help combat climate change.

Another highlight was when governments representing more than 40% of current global aviation emissions committed to new reduction targets. In addition, major aviation companies, such as Alaska Airlines, Amazon Air, JetBlue and United Airlines, announced joining the Sustainable Aviation Buyers Alliance. The alliance focuses on speeding development and scaling usage of sustainable aviation fuels that help decrease air transport emissions.

Potential impact: The shift in tone at the summit to tangible actions, including interim, shorter-term targets over aspirational, long-term goals, means that investors should have a much clearer understanding of how climate policy is likely to affect various sectors and individual businesses in the years ahead.  

2. Clear Trends Toward Greater Transparency and Standardization.

Transparency and well-defined global standards have been largely lacking in past climate agreements. While there is still much work to accomplish in this arena, the summit marked several significant advancements.

For example, the UK announced its plan to become the first net-zero financial hub, calling for other countries to follow its lead. This effort includes introducing new requirements for UK financial institutions and publicly traded companies to detail and publish how they plan to transition to a net-zero economy by 2050.

The summit also set global rules for the first time to help govern the trading of carbon offset credits with unified, internationally controlled standards and a centralized UN-supervised marketplace. Establishing this type of consistent framework should go a long way toward helping to achieve broader integrity and the global scaling necessary to reach current emission reduction goals.

Potential impact: Greater and more consistent disclosure requirements around carbon reduction efforts will help to set a more level playing field across companies and should help to reduce the risks of greenwashing that have challenged sustainability-minded investors. Rules for a new global carbon market should also help to accelerate the trading of emissions credits.

3. The Global Financial Industry is Taking a Leading Role in Sustainability Commitments.

The financial industry has stepped up in a significant way when combating climate change, even as critics point out the need to do more. During the summit, a global coalition of almost 500 financial services firms, including banks, insurers, and asset managers, pledged to align their collective $130 trillion in assets under management to meet net-zero targets by 2050.

Similarly, the Net Zero Asset Managers initiative, which consists of more than 200 investment firms (including Intech), released its first progress report as the conference got underway. More than 40 of the group’s signatories showed that roughly 35% of their total AUM is currently managed in line with net zero goals. Member organizations have committed to reaching 50% of their AUM by 2030.

Potential impact: The sheer asset size of the global financial industry brings tremendous clout to the world’s carbon reduction efforts, and these types of commitments should prove highly effective at moving a substantial and consistently growing amount of capital toward net-zero goals.

institutional investment industry teaming up in race to zeroIntech is proud of its commitment to combatting climate change as part of our broader sustainability efforts, both in the management of the firm and through our investment portfolios.


The following resources offer more information about low carbon and other sustainable investing strategies:

smallpaperCan You Make Low Vol and Low Carbon Investing Compatible

smallpaperConstructing ESG Portfolios Using Non-ESG Data

smallpaperOvercoming ESG Data Challenges

 

 

The views presented are for information purposes only and should not be used or construed as investment, legal or tax advice or as an offer to sell, a solicitation of an offer to buy, or a recommendation to buy, sell or hold any security, investment strategy or market sector. Nor do they purport to address the financial objectives or specific investment needs of any individual reader, investor, or organization. The views are subject to change at any time based upon market or other conditions, are current as of the date indicated, and may be superseded by subsequent market events or other conditions.

Past performance is no guarantee of future results. Investing involves risk, including the possible loss of principal and fluctuation of value. As with all investments, there are inherent risks that need to be considered.

Intech is the source of data unless otherwise indicated, and has reasonable belief to rely on information and data sourced from third parties.