The United Nations regularly commissions studies into the state of the climate, and the impacts that climate change is having on humanity. One of their more recent studies, produced in collaboration with the Intergovernmental Panel on Climate Change, offered stark warnings that humanity is past the point of no return for much of the damage done by climate change, although there is still time to avert the worst if humanity acts now.[1]

Speaking in response to the study, UN Secretary-General António Guterres warned that ‘we are on a pathway to global warming of more than double the 1.5-degree Celsius limit’ that was seen as a critical target of the 2015 Paris Agreement.

The report suggested that unless all countries massively reduce their use of fossil fuels while improving energy efficiency and turning to alternative fuels, such as hydrogen and renewable energy, the world will be rendered uninhabitable, with 40% of people in imminent danger from the effects of climate change.

This news follows on from a UN backed report last year, which found that no G7 stock exchanges were on target to keep warming within the acceptable 1.5-degree Celsius limit.[2] This report showed that on average, the companies that make up these indices are on a pathway to contribute to warming of 2.95-degrees Celsius – aligned with António Guterres warning that we are still on a pathway to reach these unacceptable levels of warming.

In response to these findings, the UN itself highlighted the key role that investors have to play in keeping warming to within acceptable limits. Passive investing in the G7 indices accounts for roughly 20% of European funds, while just 19% of G7 listed companies have climate policies and targets in accord with the Paris Agreement.

This shows the urgency required by investors to ensure that their portfolios are actively aligning with the Paris Agreement targets. It also demonstrates the important role that actively managed funds, such as ours, have to play in combatting climate change, and ensuring that we are on a pathway to averting the disastrous predictions from the IPCC.