INTRODUCING CLIMATE IMPACT ACCOUNTING FOR INVESTMENT PORTFOLIOS. A COMPARATIVE STUDY ON THE EXISTING METHODOLOGIES
DOI:
https://doi.org/10.54695/bmi.166.6713Keywords:
carbon footprint, portfolio, climate change, indicators, assessment, historical cost accounting, climate performance, climate impact, carbonAbstract
This study provides an overarching state-of-the-art review of climate change-related accounting practices for investment portfolios. With the adoption of the Paris Agreement and European Commission plan on sustainable finance, the question regarding the compatibility of financial flows with decarbonisation objectives has gained cardinal importance among capital market participants. The application of a viable climate-alignment framework has become inevitable for legislators, regulators, investors, issuers, and rating agencies. Carbon footprinting and intensity measurement associated with portfolio investments and its climate impact are central issues for climate performance and risk assessment, management, reporting and GHG emissions reduction target setting. This study evidences the absence of a consensual method and a notable variation in the results attained for the same portfolio across different approaches. This study focused on practices related to listed assets, namely on the attribution of climate impact generated by issuers to portfolios and investors. The findings offer a comparative study of the existing methodologies and introduce portfolio climate impact accounting concept and structure.
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