We believe in climate returns

Pale Blue Dot Asset Management does not see a trade-off between climate impact and financial performance. Instead, we believe that these two goals will become increasingly interrelated.

In 2019, net-zero pledges covered 16% of the global economy, according to the Net Zero Tracker. Today, over 90% of global GDP is covered by net-zero targets. Maintaining a net-zero course will require well over $100 trillion of investment in the next three decades, according to international agencies such as the IEA and IRENA.  These net-zero targets offer huge and long-term growth prospects for the climate solutions that can make them achievable.

At the same time, the World Bank estimates that in 2022 fewer than 4% of global emissions are directly priced in line with maintaining a 2-degree global warming limit (itself a lower target than net-zero), as set in the Paris Agreement. This implies that a massive repricing is necessary, both in terms of the vast extent of economic activity that needs to start pricing its emissions and the even higher carbon prices that must be applied to that activity.

We believe therefore that assets that have a strong climate impact - what we term climate assets - can outperform generalist benchmarks through their greater exposure to these profound growth drivers and their reduced exposure to the growing carbon price risk. 

Within each climate asset class, we select the investments that we believe will have the greatest climate impact per unit of capital. Accordingly, the more valuable those investments become, the greater the portfolio's climate impact potential. We think of this as climate return.

As stewards of capital for our own future generations, we consider the focus on climate returns to be our fundamental fiduciary duty. Our entire programme is 100% invested in climate assets and our performance-based incentivisation is 100% aligned to climate returns.