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1.5°C
Paris Agreement Target
The Paris Agreement aims to limit global warming to 1.5°C, beyond which multiple climate hazards intensify.
0.5°C
Critical Temperature Difference
A 0.5°C rise from 1.5°C to 2°C could greatly intensify climate impacts, highlighting the need for urgent emissions reductions this decade.
2.5°C
Projected Temperature Rise
Current Paris Agreement commitments may lead to a 2.5-2.9°C temperature increase due to tracking that is not science backed.
3+ billion
Vulnerable Population
3.3-3.6 billion people live in areas highly vulnerable to climate change, risking severe impacts if global temperatures continue to rise at this rate.
40%
Emissions Reduction by 2030
A science backed 40% emissions reduction by 2030 is crucial to limit temperature rise and prevent severe climate impacts.
2050
Net Zero Target Year
Achieving global net zero CO2 emissions by 2050 is crucial to limit warming to 1.5°C, requiring rapid, far-reaching transitions across all sectors.
But there is no agreed upon, science-aligned tool that shows investors whether their emissions reduction goals go far enough to meet the aims of the Paris Agreement and limit warming to 1.5°C.
This research establishes such a tool and enables investors to create truly science aligned net zero commitments for, we believe, the first time.
Many investors have made commitments to achieve net zero which may also involve interim targets. For example, investors may commit to achieve net zero portfolios by 2050 and aim to reduce the carbon emissions in their portfolio by 40% by 2030. Arbitrary percentage reduction targets like these may not be contributing enough to avoid the worst impacts of climate change.
Targets like these may be disconnected from real planetary boundaries and from the earth’s carbon budgets. The interim targets may also not properly consider the starting point of that portfolio – some portfolios will have a much more carbon intensive starting point than others.
To understand the emissions reduction needed across the whole economy, and therefore in investment portfolios, we need to understand the world’s carbon budget. How much carbon can be emitted, or must be avoided, to achieve the aims of the Paris Agreement?
To understand the emissions reduction needed across the whole economy, and therefore in investment portfolios, we need to understand the world’s carbon budget.
At what kind of pace do we need to see emissions reduced across the economy to limit warming to 1.5°C? That’s the essential question that an emissions reduction trajectory and carbon budgets allow us to consider.
This research connects investment portfolios to carbon budgets and the emissions reduction trajectory required to limit warming to 1.5°C. It does so by using the One Earth Climate Model (OECM) to allocate carbon budgets to financial markets.
Investors can download RealZero Check, in the form of a spreadsheet, which can be used to compare their portfolio to a global and Australian benchmark. Investors upload their portfolio to see how their financed emissions compare to the carbon budget.
By doing so, investors can truly see whether their portfolios are aligned with a 1.5°C future or whether they need to do more to avoid being complicit in failure to meet the Paris Agreement and contributing to catastrophic climate change.
By using RealZero Check, investors can truly see whether their portfolios are aligned with a 1.5°C future or whether they need to do more to avoid being complicit in failure to meet the Paris Agreement and contributing to catastrophic climate change.
Other approaches to connecting portfolios to carbon budgets do not limit portfolios to the real carbon budget for a warming scenario.
RealZero Check helps identify which industries and technologies are incompatible with the carbon budget and emissions reduction targets needed to limit warming to 1.5°C.
It also points to significant technological and industrial transformation milestones in different areas, including mining, aviation, and plastics, which require early investment to enable sufficient research and develop to enable implementation.
This allows investors to set strategies that match their investment philosophy, expertise, and capabilities in supporting a science aligned transition to net zero.
This allows investors to set strategies that match their investment philosophy, expertise, and capabilities in supporting a science aligned transition to net zero.
The One Earth Climate Model (OECM) is one of the most detailed climate and energy studies ever produced. It illustrates the path to meeting the goal of the Paris Climate Agreement – limiting global temperature rise to 1.5°C.
The carbon budgets in RealZero Check come from the OECM, which models the speed at which each sector needs to reduce emissions to achieve the goals of the Paris Agreement using scenario analysis.
The model shows the scale of change needed to achieve the aims of the Paris Agreement at a sector level, which is why RealZero Check also breaks down carbon budgets to the sector level. The OECM was developed by the University of Technology, Sydney Institute of Sustainable Futures and open access published by Springer and peer reviewed.
This website is intended to provide information only and does not take account of your personal objectives, situation or needs. Use of this website it not a recommendation of any financial product or a statement of advice with respect to any decisions, personal or otherwise.
We acknowledge that we operate on sovereign First Nations land. We recognise the ongoing connection Aboriginal and Torres Strait Islander people have with Country throughout this continent since time immemorial. We stand for a future where First Nations people have true justice and redress, and our society has a profound respect, understanding and commitment to acknowledging First Nations perspectives, culture, languages, histories, country, values and ancestors.
This tool and report was developed through research conducted by the UTS Institute for Sustainable Futures, with funding and support from Future Group, who is pleased to make it accessible to other financial insitutions and the public to download.
© Future Group 2024