2024 Reports

Climate Allocation Compass, a Framework for Real-World Decarbonization (Compass-FRWD)

Toledano, Perrine; Jagdish, Ajay S; Diez Andres, Maria; Camelo Vega, Ana M.; Furdak, Robert; Bastin, Christina; Goldklang, Matt; Smyth, Jane

Climate finance currently falls far short of what's required to achieve net-zero targets. In a collaboration with the Man Group, we offer a framework setting out how investors can help to close this gap.

Key takeaways:

(1) To address the global climate finance gap, CCSI and Man Group have developed the Climate Allocation Compass, a Framework for Real-World Decarbonization (‘Compass-FRWD’).
(2) Compass-FRWD is a six-step asset allocation framework designed to guide strategic capital investment across multiple portfolios. It does so by setting financing targets relative to real-world emission gaps, thereby prioritizing sectors and geographies according to decarbonization needs.
(3) Compass-FRWD provides a cyclical, investor-level framework, taking a multi-asset class approach to achieving optimal capital allocation through continuous adaptation and learning.
(4) Overcoming investment barriers also requires collaboration across financial services, with asset owners, policymakers and multilateral development banks. It requires bolstering issuers’ corporate transition strategies, addressing data reliability issues, and enlarging the universe of investable opportunities.