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The Paris agreement, what is next?

  • 26 April 2016


Four questions // Four answers
by Philippe Desfossés, CEO of ERAFP

Why is it important countries have signed the Paris Agreement on April 22 and what does it mean for the institutional investors?

That so many countries signed the agreement is good news. The Paris conference momentum has not been lost. For institutional investors that means that they can hope states will do their best to implement their INDC

What are the institutional investors doing to help countries meet the pledges they made in Paris?

Most of the institutional investors have already started to design their own strategy to hedge climate change risk. Some are more advanced but they all know they should at least measure the risk in order to mitigate it. Coalitions of investors like the Carbon pledge or the Portfolio Decarbonization Coalition are showing the way. Carbon foot printing and decarbonization strategies will help to reach the INDC.

What’s the role of putting a price on carbon?

Putting a price on carbon is of the utmost importance. Such a price would change the price signal. By doing so we would first encourage the best investment that is to reduce our energy consumption. Before increasing energy generation let’s start with increasing efficiency. There is no better energy than the one we do not use. The after a price on carbon would speed up the transition both by encouraging businesses to dump the dirtiest fossil fuels and on the contrary to invest in renewables

ERAFP released its carbon footprint, what’s next?

ERAFP started to release its carbon footprint 3 years ago. Then we have experimented a more active decarbonization strategy by adding an active filter to one mandate managed by Amundi. Now we are observing with great interest how the asset managers that have joined the AM League platform are implementing their strategy to decarbonize a notional portfolio according to a broad set of rules we have defined. In case one these strategies would appear convincing, it could be replicated for ERAFP.

See also