Investors need to adapt their strategies to meet climate objectives, a new report claims.
The CFA Institute looked at the key solutions when it comes to achieving net-zero investment objectives.
The report, Net-Zero Investing: Solutions for Benchmarks, Incentives, and Time Horizons, has been published as climate conference COP29 gets underway in Azerbaijan.
It said there needs to be a "holistic investment approach" that incorporates net-zero targets alongside traditional risk and return metrics.
Chris Fidler, head of global industry standards at CFA Institute, said: "As the global push for net-zero carbon emissions accelerates, investors must look to adapt their strategies to meet both climate and financial objectives.
"Our research shows that managing these transitions requires more than just setting long-term climate targets.
"It involves integrating net-zero benchmarks, aligning incentives, and adopting suitable time horizons for meaningful progress.
"Without these changes, asset owners risk missing out on opportunities while failing to mitigate long-term systemic risks."
The report stressed a successful net-zero approach should enhance rather than compromise traditional financial objectives and said benchmarks should measure the success of both financial returns and net-zero progress.
The CFA Institute claims there incentives for asset managers to decarbonise their portfolios wold support progress to a net-zero target of 2050.
Fidler added: "Achieving the long-term goal of net-zero by 2050 requires meeting interim targets across short- and medium-term horizons.
"Climate change has the potential to materially and unexpectedly impact portfolio assets both now and, in the future as the world works to mitigate this systemic risk.
"Evaluating the success of a net-zero investment strategy must account for this, as it differs significantly from the typical three- to five-year performance cycles used by many investors."
tara.o'connor@ft.com
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