Still, even with imperfect data and subject to a fair amount of skepticism, the effort to calculate warming potential shows how climate concern is changing the rules of the game for investors and businesses alike. Measuring a company’s alignment with the Paris objectives has the potential to become a regular part of investment analysis, in much the same way fund managers now scrutinize cash flows and earnings.

“It would be ideal if this metric became part of the everyday lexicon of traders and analysts,” said David Lunsford, co-founder of Carbon Delta who now leads climate strategy and policy at MSCI in Zurich. “More data disclosure would help us to thoroughly assess companies’ temperature alignments and could encourage a wider adoption of the metric.”

Investors that have published a warming potential calculation have two notable commonalities: Their portfolios imply around 3°C of warming, and they have concluded there’s only so much cooling possible on their own.

“To some extent, our portfolio reflects the real economy and there’s a limit to which we can disconnect from that,” said Ben Carr, an analytics and capital-modeling director at Aviva, where he has led the London-based insurer’s work on the development of climate metrics. Aviva recorded a warming potential at the end of 2019 of 3.2°C for its equities holdings and 3°C for corporate credit.

For most of the early adopters, the results are rather dystopian. Japan’s GPIF estimated 2.76°C of warming for equities and 2.88°C for bonds in its home market, while its foreign stock and fixed-income holdings had a warming potential of 2.97°C and 2.76°C, respectively.

In the U.S., meanwhile, the California Public Employees’ Retirement System said its global equity and fixed-income holdings, which account for 75% of its assets, are on track for a warming potential of 3.23°C by 2050.

Aviva reduced the warming potential of its equity and credit portfolios by 0.2°C between 2018 and 2019 by engaging with portfolio companies. It also divested from those “where we see no prospect of progress,” Carr said.

While that approach may have brought some success in the past, time is running out to curb emissions and set the economy on path to net zero, according to a December report from MSCI’s ESG research group. Institutional investors, working with governments and the public, are going to have to do their part to persuade companies to make radical changes. If they don’t, there’s a growing risk that money managers will face a rapidly-shrinking universe of investments that can be considered Paris-aligned, the MSCI analysts said.

Just 16% of an MSCI index covering 9,000 stocks globally were aligned to a 2°C temperature-rise scenario at the end of November, and only 5% were on course for a 1.5°C world, MSCI said, making clear just how much more needs to be done.

“The warming-potential concept requires a far broader public-private effort that cannot be achieved by investors alone,” said Decoene, who’s also responsible for corporate communications and brand management at Axa. “This is a huge undertaking, for us and also for markets, businesses and policymakers.”