MICHAEL LEWIS | Head of ESG Thematic Research, DWS Group GmbH & Co. KGaA
CARSTEN KEIL | Head of ESG Engine & Solutions, DWS Group GmbH & Co. KGaA

There have been significant advancements in addressing climate transition risk from an investment portfolio perspective in recent years. This has been warranted given the shortcomings of carbon foot-printing as a proxy for climate risk. The challenge for investors has been to understand the increasing variety of climate transition risk methodologies available in the marketplace, followed by the subsequent incorporation of climate risk into the investment process.

By combining the various techniques offered by multiple data providers, DWS aims to capture risk across multiple dimensions that incorporate carbon intensity metrics, carbon pricing scenarios, and climate-related opportunities. This ability to identify climate risks and opportunities at a security, sub-sector, and sector level basis allows us to optimize a portfolio that not only reduces climate transition risk, but also tilts investments towards entities that promote the low carbon transition.