Using exclusion and divestment approaches strategically for activities with adverse climate impacts

Why? Institutions are establishing exclusion and divestment approaches for activities, technologies or sectors that are seen as inconsistent with their climate-related strategies and goals as in some instances, it can reduce adverse impact on the transition to low-GHG and climate-resilient economies and/or exposure to climate-related financial risk.

How? Criteria for exclusion or divestment rely on the identification of activities and technologies that are inconsistent with climate transition scenarios. Assets and companies that surpass a defined level of exposure to these activities or technologies are excluded or subject to divestment. Today, discussions focus on how to ensure an impactful contribution to decreasing emissions or increasing resilience in the real economy by the strategic use of divestment and exclusion on one hand, and engagement with companies and counterparties on the other hand.