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Bridging the Gap: A Framework for Real-World Decarbonization

October 17, 2024

This material is intended only for Institutional Investors, Qualified Investors, and Investment Professionals. Not intended for retail investors or for public distribution.

Climate finance currently falls far short of what's required to achieve net-zero targets. In a collaboration between Man Group and the Columbia Center on Sustainable Investment, we offer a framework setting out how investors can help to close this gap.

Key takeaways:

  • To address the global climate finance gap, the Columbia Center on Sustainable Investment and Man Group have developed the Climate Allocation Compass, a Framework for Real-World Decarbonization (Compass-FRWD).
  • Compass-FRWD is a six-step asset allocation framework designed to guide strategic capital investment across multiple portfolios. It does so by setting financing targets relative to real-world emission gaps, thereby prioritizing sectors and geographies according to decarbonization needs. It provides a cyclical, investor-level framework, taking a multi-asset class approach to achieving optimal capital allocation through continuous adaptation and learning.
  • Overcoming investment barriers also requires collaboration across financial services, with asset owners, policymakers and multilateral development banks. It requires bolstering issuers’ corporate transition strategies, addressing data reliability issues, and enlarging the universe of investable opportunities.

Authors

Columbia Center on Sustainable Investment

Perrine Toledano, Ajay S. Jagdish, Maria Diez Andres, Ana M. Camelo Vega

Man Group

Rob Furdak, Christina Bastin, Matt Goldklang, Jane Smyth

Read full paper    Read Executive Summary

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Author(s)

Robert E. Furdak, CFA Chief Investment Officer for Responsible Investment, Chair of the Responsible Investment Committee, Man Group
Christina Bastin | Citiwire AA Portfolio Manager, Credit – Global Impact and Asia, Man Group
Matt Goldklang Climate Scientist, Man Numeric
Jane E. Smyth, Ph.D. Climate Scientist, Man Group

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