Climate Progress Dashboard - Institutional Investors

Climate change – navigating risks and opportunities

Climate change is becoming a defining theme of the global economy.

Rigorous strategies are needed for investors to manage risks and take opportunities during the expected transition to a decarbonised world. Our research and tools focus on providing new thinking and solutions to help guide investors as the impact of climate change unfolds.

Climate Progress Dashboard

Carbon Value at Risk

Fossil Fuel Producers

Keeping track of activity: the Climate Progress Dashboard

Our Climate Progress Dashboard monitors 12 indicators* to show the progress being made towards decarbonizing the global economy. It compares projections made by international organizations to estimate the temperature change implied by the progress in each area. Together, they suggest we are heading for a rise closer to 4° than the 2° commitment global leaders made in Paris in 2015.

Introducing the dashboard Q4 2018 update Q3 2018 update

*Temperatures are measured in degrees celsius. Data as of December 28, 2018.

3.9°

Aggregate implied temperature rise

Political change

Business and finance

Technology solution

Entrenched industry

Political ambition

3.0°

Tracks the level of political ambition expressed through Intended Nationally Determined Contributions (INDCs). Those INDCs represent the targets individual countries have set to contain greenhouse gas emissions. The NGO Climate Action Tracker tracks individual countries' commitments and the temperature rises they imply, which analysis we use here. We calculate historical data from reported national commitments in past years

Source: Climate Action Tracker, UNFCC and Schroders analysis, latest data available as at 22 December 2018

Corporate planning

3.6°

Tracks the strength of corporate action to align their business strategies with a less carbon-intensive global economy. We track the average CDP Performance Scores for large global companies. The scores combine analysis of a range of performance, policy and target measures based on companies' responses to CDP's survey. CDP, formerly the Carbon Disclosure Project, is a non-profit organisation that reports on the environmental impact of companies.

Source: CDP latest data available as at 22 December 2018

Electric vehicles

3.4°

Meeting long-term climate commitments will probably require a significant rise in electric vehicle use. Our analysis compares the global stock of plug in electric vehicles (using annual sales data and assuming an average eight-year vehicle life) to projections the IEA (International Energy Agency) has made for electric vehicle use under a range of temperature scenarios.

Source: IEA and Schroders estimates & analysis, latest data available as at 22 December 2018

Oil & gas investment

4.6°

Compares the amounts being invested in production (capital expenditure as a percentage of a company’s assets) by listed global oil & gas companies compared to the required production growth over the next decade. Higher production growth would add to rising temperatures. The blue line needs to fall to the green line to meet the 2 degree target.

Source: Thomson Reuters, IEA, and Schroders analysis, latest data available as at 22 December 2018

Public concern

3.4°

Tracks the level of public concern over climate change. It uses the percentage of respondents to Gallup's annual global survey of major countries which identify climate change as a concern. We assume that 90% concern equates to 2 degree temperature rise and 10% concern level to 6 degrees.

Source: Gallup, and Schroders estimates & analysis, latest data available as at 22 December

Climate finance

4.5°

Decarbonising the global economy will require significant investment in clean energy infrastructure, a large proportion of which will depend on the availability of finance focused on those environmental solutions. The temperature pathways are based on the amount of climate finance identified in annual reports by the UN Environment Program compared to the estimated amounts needed, according to Bloomberg New Energy Finance.

Source: UNEP, Bloomberg New Energy Finance and Schroders analysis, latest data available as at 22 December

Renewable capacity

2.9°

Compares the level of renewables capacity (excluding hydro) available every year against the levels the IEA estimates will be needed to contain temperature rises to different levels. We have used the BP Statistical Review as a source of renewable energy capacity. Containing and stabilising global temperature rises will probably ultimately require a complete transition away from fossil fuels, hence the need for growth in renewable use.

Source: IEA, BP Statistical Review and Schroders analysis, latest data available as at 22 December

Fossil fuel reserves

4.4°

Compares the growth in oil, gas and coal reserve additions (based on the energy contained in each fuel) to the pace of growth in fossil fuel demand implied by the IEA’s temperature scenarios. Our analysis examines the growth in reserves over the previous years, plus that year’s production, to gauge the volume of reserves added during the year. By comparing that reserve growth to the level of demand growth implied in each scenario, we estimate the pace of future growth consistent with the reserve additions during the year. Global fossil fuel producers already hold more reserves than can be consumed within a two degree temperature limit, but we focus here on the pace of new additions.

Source: IEA, BP Statistical Review and Schroders analysis, latest data available as at 22 December.

Political action

3.3°

Tracks the level of action governments have taken to implement policies and laws that will reduce future carbon emissions. Whereas analysis under INDC (the Intended Nationally Determined Contributions that formed part of the Paris climate agreement in 2015) focuses on their statements of ambition, our analysis examines the actions they have taken to achieve those goals. We use the work of the Climate Action Tracker, a non-governmental organisation, to monitor the stringency of those policies in each country and their overall global effect.

Source: Climate Action Tracker, IEA climate policy database and Schroders analysis, latest data available as at 22 December 2018

Carbon prices

2.9°

Carbon pricing – a system of charging those who emit CO2 – is a way of reducing global warming emissions. We compare the carbon prices on European and US schemes to the levels which are likely to be needed to cut greenhouse gas emissions far enough to meet climate goals. We have combined the analyses of required carbon prices from a range of national and international organisations to estimate the levels likely to be needed.

Source : EU ETS, RGGI and Schroders estimates & analysis,latest data available as at 22 December 2018

CCS capacity

5.0°

Compares the level of carbon capture and storage (CCS) capacity likely to be developed to the estimates of what will be needed in the future, according to the IEA. We examine projects identified by the Global CCS Institute as being in operation, construction, planned or under consideration.

Source: IEA, Global CCS Institute and Schroders estimates & analysis, latest data available as at 22 December 2018

Fossil fuel production

5.6°

Compares the level of oil, gas and coal production (based on the energy contained in each fuel) to the levels required to meet the IEA’s temperature scenarios. Fossil fuel use is the key driver of greenhouse gas emissions, accounting for four-fifths of the global total. Coal is twice as carbon intensive as gas, with oil lying mid-way between them, so while different combinations of fuel are possible, their overall use will have to fall significantly in the future, ultimately to zero. Production will need to fall more quickly under more ambitious climate scenarios.

Source: IEA, BP Statistical Review and Schroders analysis.

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Climate change will be a defining driver of the global economy, society and financial markets over coming years, decades and beyond. Whether the global economy is rebuilt on less carbon intensive foundations or the temperature continues to escalate, investors will be unable to avoid its impacts.

Climate change insights

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