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Emissions are a vanity metric
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This conversation with Nolan Lindquist at the Center for Active Stewardship (CAS) covers various topics, including CAS’s focus of CAS on climate transition risk and the limitations of using emissions as a universal metric. The conversation emphasizes the importance of fundamental analysis and developing a real rapport with companies to navigate the complex process of decarbonization. The discussion also introduces a tool called Splice, which provides a visualization of a company’s emissions. The conversation delves into the different types of emissions and the significance of trading activities. It highlights the importance of transparency in understanding the quality and cost of emissions reductions. The conversation concludes by discussing the transition from ESG 1.0 to ESG 2.0, focusing on activity-centric reporting and the need to align disclosures with long-term value creation.
Takeaways
The Center for Active Stewardship focuses on climate transition risks and aims to redirect corporate investment towards net zero by finding win-win opportunities that drive shareholder value.
Emissions may not be the best metric for measuring financial materiality of climate change, especially for industries with low energy intensity and high reliance on grid electricity.
For many companies, decarbonization will likely be a passive process as utilities shift away from fossil fuels to renewables.
The decarbonization of hard-to-decarbonize industries, such as steel and cement, requires radical shifts in production processes and significant government support. Active management is crucial in addressing strategic dilemmas related to ESG issues.
Transparency is key in understanding the quality and cost of emissions reductions.
The transition from ESG 1.0 to ESG 2.0 involves activity-centric reporting and aligning disclosures with long-term value creation.
Links
FT: The cast against carbon emissions as a universal metric
Splice: Center for Active Stewardship
Research: State of Play: Proxy Season 2024
Contact Us
Guest: https://www.linkedin.com/in/nolanlindquist/
Email us: info@climatetech360.com
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