Investment manager Hermes has published a report highlighting the opportunities presented by the Paris Agreement.

The paper said that investors will focus on decarbonising their own portfolios once they have a better understanding of the risks to current business models that the transition to a low-carbon economy will produce and the opportunities it will create.

Saker Nusseibeh, Chief Executive at Hermes Investment Management, said:

“It will be easier to attract mainstream investors by showing them the value of tapping into the growth potential of the transition to a low-carbon economy, whether through new companies, innovative technologies or by adapting new business models.

“We need to challenge the current economic and financial models used by the investment industry if we are to ensure that the world does not breach the scientifically-guided objectives we have set for ourselves on climate change.”

‘Game-changing opportunity’

In assets such as real estate, infrastructure and private equity, there is scope for innovative strategies including renewable energy, energy efficiency, demand-side management and new services, technologies and products to facilitate carbon reductions, Hermes said.

Nusseibeh added: “The low-carbon transition represents a game-changing opportunity.

“We see growing interest for low-carbon investments reflected in the growth in low-carbon products, services and technology and a budding interest from institutional investors in investment solutions that not only account for climate risks but also tap into opportunities.”

> Download the report