Green fintech Sugi this week launched a new feature enabling users to check the temperature alignment of their investment portfolios. For the first time, UK retail investors can check the warming potential of their portfolios and whether they’re aligned with the Paris Agreement’s 2°C target.
Through Open Finance technology, Sugi connects to over 80 investment platforms, covering most of the UK online investing market. By connecting one or more portfolios on the Sugi app, users can view their overall portfolio temperature. Using data from S&P Global Trucost, Sugi’s portfolio temperature feature incorporates results from 4,400 global listed companies and all the major global indices.
The 2°C target is internationally agreed as the limit to which global temperature can rise, with 1.5°C regarded as a stretch target. Exceeding 2°C risks uncontrollable global warming, with catastrophic and irreversible effects on the planet.
Most investment portfolios still contribute to uncontrollable warming
Most investment portfolios are aligned with around 3°C of global warming. Historically, it has been difficult for both retail and institutional investors to obtain data on portfolio temperature. However, the investment industry is under growing pressure to reveal the ‘warming potential’ of portfolios. Some fund managers have stated their intent to publish this data, but there has been little uptake to date.
Portfolio temperature is included as part of Sugi’s core app which is free for all users, alongside carbon impact data, benchmarking and comparison investments. The app will launch additional features in the spring to help users reduce their environmental impact.
“It’s widely acknowledged that global emissions need to halve by 2030 and reach net zero by 2050,” said Josh Gregory, CEO and Founder of Sugi. “Yet recent pledges to the UN by 75 countries reflect less than a 1% reduction in that time frame. By shifting our investments to green, everyday investors can take control, driving change in the investment industry and corporate behaviour to make a real difference. But we can only do that with the right information. At the moment, none of us has any idea about the real impact our investments have on the planet.”
With Sugi, UK retail investors can see how much their portfolios contribute to global warming and the difference between what companies say they’re doing to combat climate change and what they’re actually doing. More importantly, investors can use that information to make greener choices when managing your finances.
Sugi uses S&P Global Trucost for its temperature alignment data. S&P Global Trucost’s transition pathway assessment uses historical and forecast data to examine the adequacy of a company’s emissions reductions over time in meeting appropriate carbon budgets that would result in specified levels of warming.