Financial market participants have been increasingly in the spotlight when it comes to climate change.

After years of pressure by divestment campaigns, as well as being targeted by regulators and building internal capacity, the investment community has embarked upon stronger efforts to address climate change with their investments.

There is, however, still some confusion when investors talk about “decarbonization”. Some refer to decarbonizing their portfolios and mean de-risking them against the regulatory and physical effects of climate change. Others refer to decarbonizing the real economy and mean the impact that their investments can have on the climate.

This paper is addressing the latter: How investors can have an impact on the climate across different asset classes. This will be discussed for multiple forms of equity investment instruments, such as listed equity, private equity, venture capital and real asset investments. It will also cover debt investment instruments such as bonds and loans.