2023 ESG Investing Report
At PGIM, we believe asset class specific ESG frameworks and integration represent the most credible approach to ESG from a fiduciary and client perspective.
Expectations for the COP29 summit, held in late November, were muted to begin with due to the limited progress on a collective finance goal, a growing area of contention in recent years, with the prospect of a U.S. withdrawal from the Paris Agreement also casting a gloom over the conference. While a ‘minimum’ goal of $300 billion per year on international climate finance flows from developed markets to EMDEs by 2035 was agreed to replace a previous goal of $100 billion, it remains short of most estimates needed to support the transition in emerging markets.
Investment and Spending Needs by 2030 to Support Climate Goals in EMDEs*
However, one key breakthrough was an agreement governing international trade in emissions reduction credits. Implementing these activities will build confidence in the new marketplace and address the well-known integrity challenges plaguing the voluntary carbon markets. Several countries also announced updated reductions pledges, notably, the UK, Brazil and Indonesia, with the former announcing an 81% reduction target by 2035.
A major headwind to climate action is the prospect of the US withdrawal from the Paris Agreement for the second time following Donald Trump’s election win. A potential US withdrawal is likely to lead to continued emissions reductions – albeit at a pace that means significantly missing the official target of a 50% reduction in emissions by 2030. At the same time, China stands to gain significantly from the energy transition due to its dominant role in key low-carbon value chains.
Dive deeper into these dynamics by downloading the full article to explore the potential investment implications from the recently concluded summit and the opportunities emerging in a variety of sectors.
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