Climate Progress Dashboard - Financial Professionals

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 decarbonising the global economy. It compares projections made by international organisations 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 Q3 2017 update Q4 2017 update

*Temperatures are measured in degrees celsius. Data as at 31 December 2017.

4.1°

Aggregate implied temperature rise

Political change

Business and finance

Technology solution

Entrenched industry

Political ambition

3.2°

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, December 2017

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 December 2017

Electric vehicles

3.9°

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, December 2017

Oil & gas investment

3.9°

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, December 2017

Public concern

3.2°

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, December 2017

Climate finance

4.6°

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, December 2017

Renewable capacity

3.1°

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, December 2017

Coal production

2.2°

Compares the level of coal production against the levels required for key temperature scenarios, as identified by the International Energy Agency. Coal is the most carbon intensive of the fossil fuels (producing approximately twice as much CO2 as gas, for an equivalent amount of energy production). Consumption will have to fall significantly under more ambitious climate scenarios.

Source: IEA, BP Statistical Review and Schroders analysis, December 2017

Political action

3.4°

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, December 2017

Carbon prices

4.9°

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,December 2017

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,December 2017

Oil & gas production

7.8°

Compares the level of oil & gas production to the levels required to meet the IEA’s temperature scenarios. While less carbon intensive than coal, oil and gas are major contributors to global GHG emissions and their 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,December 2017

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Mercury rising: the investment case for the Climate Progress Dashboard

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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