CLMA Whitepaper
Part 1: Introducing the iClima Global Decarbonisation Enablers UCITS ETF
Part 2: The Danger of Climate Change
Part 3: Global Tailwinds: Raising Awareness of Climate Change
The iClima Global Decarbonisation Enablers UCITS ETF
The importance of a climate change ETF
Since the late 19th century, increasing rates of
CO2e have been polluting the earth’s atmosphere. The increase in CO2e emissions picked up pace
at the end of the last century, and this has led to an increasing rise in
global temperatures as illustrated in the graph below.
For
illustrative purposes only
Source of
chart: Climate Central. Data source:
NASA GISS, NOAA NCEI, ESRL.
In the 2015 Paris Agreement, world leaders agreed a path to
reducing emissions in order to limit global temperature rises and avoid the
worst impacts from climate change this century.
However, levels of emissions have been increasing since the Agreement, and
the world now must act more drastically in order to meet the goals laid out in
2015.
CO2 reductions needed to keep
global temperature rise below 1.5°C
For illustrative purposes only
Source: Robbie Andrews 2019; based on Global Carbon
Project & IPPC SR15
In 2019, the equivalent of
56 Gt[1] of CO2e were released into the atmosphere[2]. 1 Gt of CO2e is enough to cover the UK in a blanket of CO2e
4.1 meters thick[3]. To achieve the target of limiting temperature rises to 1.5°C, we must halve the current level of
CO2e emissions within 10 years[4]. That’s a yearly reduction target of about 4 Gt of CO2e. Incremental improvements will not be enough. By sticking to current policies, it is estimated that the climate will
reach 2.8-3.2°C above pre-industrial levels, which will compound the effects of
climate change, destroying ecosystems and livelihoods around the world.
Global greenhouse gas emissions
and warning scenarios
For illustrative
purposes only
Source: https://ourworldindata.org/future-emissions
For
the world to reach the above targets and achieve net-zero emissions by 2050,
large amounts of investment are necessary, and this is why we have created our climate change ETF. The CPI estimates that in 2018
annual investment flow reached $579 billion.
However, the Intergovernmental Panel on Climate Change (IPCC, 2018)
estimates that at least three times that amount ($1.6 trillion) of annual
investments will be needed until 2050 to achieve the low-carbon transition[5].
The chart below shows public expenditure alone on mitigation efforts.
Average annual public mitigation finance: 2015-2018, $USD bn
For illustrative purposes only
Source: IPCC, CPI Investment Tracking Tool
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To learn more about our climate change ETF, please visit our fund page.