Systematic Avenues to Sustainable Investing

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Climate change is among the most prevalent environmental challenges of our times. It is widelyaccepted that global warming is to be limited by 2 C, preferably 1.5 C, compared to pre-industriallevels to avoid tipping points and cascade effects that could lead to an irreversible release ofcurrently stored greenhouse gases. Considering these challenges, the Paris Agreement is animportant step forward, requiring signatories to commit to reducing their greenhouse gasemissions. Investors will play a crucial role in thus mitigating climate change; indeed, differentfinancial regulations require investors to manage climate risks and to increase transparency on theclimate effects of their investments. The purpose of our proposed research project is to advance asystematic framework to sustainable investing that ultimately enables investors to acceleratetemperature alignment and other non-financial sustainability considerations. As such we willfurther the academic profession's understanding of the underlying economic mechanism and provide guidance to the investment management industry for efficiently navigating sustainable investment processes.