Ignites Europe has featured new research from Scientific Portfolio an EDHEC Venture, highlighting how ethical choices fundamentally shape climate investing methodologies, challenging the idea that climate alignment metrics can be standardised purely through scientific means. The piece highlights findings from our paper “A Question of Ethics? Climate Alignment in Equity Portfolios,” showing that ethical choices underpin every methodology in climate alignment metrics and that purely scientific standardisation is not possible.

“Our research shows that hidden ethical choices lie at the heart of every methodology. Making these assumptions transparent is essential — not only for credibility and governance, but also to ensure that investors can align their strategies with their own clearly defined values.”
— Vincent Bouchet, Director of ESG & Climate Research, Scientific Portfolio

The study argues that efforts to “establish a foundation for environmentally focused investing that is grounded in science rather than relying on values” inevitably confront moral decisions that shape outcomes at every step.

While scientific principles can inform certain aspects of climate alignment methodologies, the researchers conclude that “much of the necessary parameterisation sits on moral foundations.” Beneath even the most data-driven processes, “key decisions are unavoidably ethical in nature.”. The research team examined how methodological steps such as the ambition level of reference scenarios, regional allocations, emission scopes, and pace of reduction are rooted in ethical reasoning. For example, they note that:

“The level of ambition of a target is tied to ethical questions of intergenerational fairness, “where overly ambitious goals could impose disproportionate costs on current generations, while insufficient action would “impose unfair costs on future generations.”

Similarly, regional allocation decisions raise questions of “interregional justice,” such as whether wealthier nations bear greater responsibility for mitigation than developing countries.

To illustrate, the academics modelled three alignment methodologies principled, utilitarian, and harmonist on an equity portfolio of the 1,300 largest developed-market stocks.
While the overall excess emissions relative to a 1.5 °C pathway were comparable, the sector-level outcomes diverged sharply:

• The principled approach showed a 131% overshoot of greenhouse-gas emissions from the oil and gas sector,
• Compared with 94% under the utilitarian model.

The paper urges the investment management industry to make the ethical foundations of their models and decisions transparent, enabling investors to select strategies aligned with their own values.

Read the full article on Ignites Europe:
👉 Ethical considerations hamper climate investing standardisation