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Think Carbon optimization

Trade-offs between risk, return and net zero carbon

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Dimitrios N. Stathopoulos
Head of Americas Institutional Advisory Services
Sources: MSCI; FactSet; Nuveen Real Assets. Asset class risk and return represented by the following indices: U.S. fixed income: Bloomberg US Aggregate Index; Global fixed income: Bloomberg Global Aggregate ex-USD Total Return Index, value unhedged USD; U.S. equities: Russell 300 Index; Global equities: MSCI ACWI ex-US Index; Infrastructure: MSCI Private Global Infrastructure Index; Farmland: NCREIF Farmland Index; Timberland: NCREIF Timberland Index. All returns in USD. Carbon intensity estimates are sourced from MSCI for the following indices: U.S. fixed income: Bloomberg US Aggregate Index; Global fixed income: Bloomberg Global Aggregate ex-USD Total Return Index, value unhedged USD; U.S. equities: Russell 300 Index; Global equities: MSCI ACWI ex-US Index; Infrastructure: S&P Global Infrastructure NR USD; Nuveen internal estimates for Farmland and Timberland.

Past performance is no guarantee of future results.

Note: All carbon intensities include scope 1 and 2 emissions and exclude scope 3. Timberland and farmland emissions exclude farm and forest management activities which are considered scope 3. Timberland removals are representative of average annual change in forest carbon stock for a portfolio that includes a mix of sustainable forestry and improved forest management strategies. Improved forest management strategies exhibit significant net removals whereas sustainable forestry strategies feature stable carbon stocks and do not have any net removals. Removals for improved forest management strategies are calculated by converting verified carbon credits of Nuveen-managed/administered properties into an annual rate of change in forest carbon stock. These rates of removals are not perpetual and may change over time as volume growth cannot exceed rate of harvest (and/or decomposition) perpetually.

The risk-return characteristics of the timberland portfolio from which carbon intensities are estimated may not exhibit that of NCREIF Timberland Index which includes primarily sustainable forestry strategies. The risk-return characteristics of the farmland portfolio from which carbon intensities are estimated may not exhibit that of NCREIF Farmland Index. The risk-return characteristics of the S&P Global Infrastructure Index from which carbon intensities are calculated may not exhibit that of the MSCI Private Global Infrastructure Index.
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