Making investment sustainable

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Cambridge Econometrics is a Business Reporter client

Since its founding more than 30 years ago, Cambridge Econometrics has emerged at the forefront of applied economics, helping investors and policymakers navigate an increasingly challenging world.

The impact of climate change on the global economy is likely to be particularly significant and long-lasting. Understandably, investors are keen to assess the risks as well as maximise any potential opportunities that will arise as the world transitions to a zero-carbon world. Responding to this demand, the company has developed climate scenarios specifically for the investment community and now serves a broad range of the world’s biggest banks and investors. It’s no surprise that in both 2020 and 2021, the company’s clients and peers ensured it made the Financial Times’ UK’s Leading Management Consultants list.

The company’s climate scenarios have been developed using a state-of-the-art model of the global economy, which is based on a more realistic representation of the markets than its rivals. The team can map out the scale and distribution of climate-related risks, including:

• advances in energy technology that reduce the need for fossil fuels
• policy action by governments such as carbon taxes, energy efficiency regulations and renewables subsidies
• extreme weather, flooding and sea rises

These risks can be mapped over time, broken down by industry sector and geography. The impact of different global temperature pathways can also be tested, providing investors with the key economic indicators that they need to develop ‘climate risk-aware’ sustainable investment portfolios. Together with the insight of the sustainable investment team, smart investors who partner with Cambridge Econometrics are likely to have a competitive advantage in the market.

The company’s climate scenarios are aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) and Network for Greening the Financial System (NGFS) – in fact, Cambridge Econometrics scenarios include more granularity by geography and sector and take into account a broad range of policies, such as carbon prices, subsidies and electric vehicle mandates.

For clients with in-house modelling capability, the results can be taken and converted into financial estimations. For other companies, Cambridge Econometrics offers a comprehensive level of support in partnership with Ortec Finance.

We can help you build an investment portfolio which is resilient to climate change, find out how here

Originally published on Business Reporter