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13th June 2005 - Henderson reveals investment implications of carbon emissions in two reports - research & analysis by Trucost
Today Henderson Global Investors reveals the investment implications of carbon emissions in two pioneering reports. In the first study of its kind The Carbon 100 evaluates the total carbon emissions of the FTSE 100. Alongside this, Trucost's carbon audit - How Green is My Portfolio? - reveals Henderson's fund as 32% less carbon intensive than the FTSE All Share.
Some key conclusions of The Carbon 100 report are:
- Emissions are concentrated in a limited number of sectors and stocks
Just five sectors, accounting for 29% of market capitalisation generate 85% of direct carbon emissions: Oil & Gas, Electricity, Mining, Steel and Leisure.
- Carbon intensity varies considerably between and within sectors
Carbon intensity measures the dependence of current business operations on carbon emissions. On average, FTSE 100 companies generate 1,126 tonnes of direct and indirect CO2-e per £mn of turnover. This average masks a wide variation in intensities. Thus, 20 companies generate more than 1,000t, while another 17 emit less than a 100 tonnes for each £mn of turnover. Finally, there can be wide variations in carbon intensity between companies within the same sector, ranging from eight times in the mining sector to 20 times in the leisure sector.
- Corporate disclosure to investors is incomplete
Under half of FTSE 100 companies disclose their carbon emissions, accounting for over two-thirds of emissions. In addition, even for those companies that do report, there is still a considerable lack of comparability in reported data.
Alongside this, Trucost also conducted a carbon audit of Henderson’s Sustainable and Responsible Investment (SRI) funds. The results are presented in a parallel study, How Green is My Portfolio?, which shows that Henderson’s Global Care Income fund is 32% less carbon intensive than its benchmark, the FTSE All Share index.
“These reports confirm the investment importance of climate change”, says Nick Robins, Head of SRI Funds at Henderson. "Responding to climate change has long been at the heart of SRI funds, where we seek out companies providing solutions to the problem, what we call the Industries of the Future. The carbon audit shows that this active approach to SRI not only delivers financial returns, but can bring substantial environmental benefits as well."
Simon Thomas, chief executive of Trucost said: "Henderson is one of the first investors to look at the risks posed to companies by carbon constraints. Trucost's quantitative, comparable data enables them to better understand these risks. By using quantitative metrics The Carbon 100 demonstrates the financial significance of carbon emissions to the FTSE 100.
"Trucost's comprehensive coverage and standard methodology have been used to compare the carbon intensity of Henderson's Global Care Income fund with that of the FTSE All Share. The analysis highlights the most significant contributors and will form a valuable additional input to Henderson's investment process."
Looking to the future, the reports demonstrate the need for improved disclosure from companies to enable investors to make informed decisions about climate change. “The new Operating and Financial Review reporting requirements provide an important opportunity for companies to make the linkages between climate change and core value drivers”, says Mr Robins.
You can download the two reports in Adobe Acrobat format (.pdf) by clicking on the links provided above.
- ends -
Notes to Editors
About The Carbon 100
The Carbon 100 aims to move the debate on to carbon performance, so that meaningful comparisons can be drawn about each company’s contribution to climate change. To this end, Henderson commissioned Trucost to profile the carbon emissions of the FTSE 100 companies, their carbon intensity in terms of turnover, earnings before interest, taxation, depreciation and amortisation (EBITDA) and market capitalisation, and their exposure to measures that internalise the costs of carbon. These calculations were made on the companies’ global emissions, not just those within the UK. Where emissions’ data was not publicly available, an estimate was made using Trucost’s environmental profiling system. The study also reviewed the quality and quantity of current disclosures to investors.
About Henderson Global Investors
Henderson Global Investors is a leading investment manager, providing a wide range of investment products and services to institutions and individuals in Asia, Europe and North America. Henderson manages over £69.1 billion (as at 31 December 2004) in assets and employs more than 900 people around the world.
Henderson SRI
Henderson has an established SRI track record and has managed funds with social, ethical and environmental dimensions since 1977. Henderson currently manages £1.1billion (as at 31 December 2004) in SRI pooled and segregated SRI portfolios on behalf of personal and institutional investors. The funds vary in relation to their investment characteristics and their ethical and sustainability stance.
In May this year Henderson launched the Industries of the Future Fund that aims to provide capital growth by investing in companies that provide solutions to sustainability challenges. Henderson has identified 10 Industries of the Future themes. These include sectors with defensive earnings characteristics, such as social housing, water and sustainable transport. Also included are sectors with significant growth opportunities such as healthcare and renewable energy.
For further information about SRI at Henderson please visit www.henderson.com/home/sri
About Trucost
Trucost Plc is an environmental research company established to help companies and investors understand the environmental impacts of business activities. Trucost provides data and analysis on company emissions and natural resource usage and presents these in financial as well as quantity terms, providing the basis for an improved dialogue between companies, investors and other stakeholders. Trucost analysis covers a wide variety of environmental issues, including climate change, hazardous emissions and natural resource use. This analysis is available for over 2,500 companies and sectors worldwide. Trucost also provides services to companies and has helped many leading corporations identify and report on the environmental issues that are material to their businesses.
Trucost has the support of an International Advisory Panel of leading academics in the fields of economics and the environment, who lend their considerable experience to the specialist research staff located in London:
More information: For Investors
Media contact: Philippa Thomson
T: +44 207 321 3833.
info@trucost.com
For more information contact Trucost on +44 (0)20 7321 3833
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