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Legal & General Investment Management (LGIM) – The time value of decarbonisation
5 Mar 2024
LGIM proposes a carbon discount rate that can be used to ‘discount’ the value of future carbon emissions reductions, relative to near-term ones. We justify the use of this rate by considering how a reduction of one tonne of CO2 per year (1tCO₂/year) – relative to business as usual – will compound over time. Accordingly, we believe near-term carbon reductions are more valuable than equivalent reductions in the future.
![](https://www.portfolio-institutional.co.uk/wp-content/uploads/2024/03/How-social-factors-sit-in-the-nest-of-wider-PLSA-RI-work-in-2024.jpg?x70966)
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LGIM proposes a carbon discount rate that can be used to ‘discount’ the value of future carbon emissions reductions, relative to near-term ones. We justify the use of this rate by considering how a reduction of one tonne of CO2 per year (1tCO₂/year) – relative to business as usual – will compound over time. Accordingly, we believe near-term carbon reductions are more valuable than equivalent reductions in the future.
![](https://www.portfolio-institutional.co.uk/wp-content/uploads/2024/03/How-social-factors-sit-in-the-nest-of-wider-PLSA-RI-work-in-2024.jpg?x70966)
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