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How Green is My Portfolio? a carbon audit of the Henderson Global Care Income Fund
13 June 2005
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Overview
Trucost found that the Global Care Income fund was 32% less carbon intensive than its benchmark. Underweight positions in Mining and Oil & Gas made the largest positive impact on the fund’s carbon intensity, while an over-weight position in Utilities had the biggest negative impact. This analysis only addresses the operational emissions generated by the companies in the portfolio; it does not calculate the emissions associated with a company’s goods and services. Substantial emissions are generated from the consumption of oil, gas and coal sold by British companies, which is not included in this analysis. The fund’s significant under-weight position in these sectors means that the fund has limited exposure to regulatory measures being taken to reduce consumption of these carbon intensive fuels.
Extract
Climate change is now widely recognised as the most significant environmental issue facing the global economy. Rising emissions and a disrupted climate are leading to a range of impacts, such as more frequent heat waves, increased intensity of floods and droughts, as well as rising sea-levels. These changes are already translating into real human and economic losses. For example, the 2003 heat-wave that affected much of Europe is estimated to have caused 26,000 premature deaths and had an estimated economic cost of $13.5 billion.
Investors need to know how their investments are contributing to the problem, and understand the risks and opportunities that are emerging on the road to a low carbon economy. Henderson’s Sustainable and Responsible Investment (SRI) funds have long had climate change at the heart of their investment strategy. Henderson seek out companies providing solutions to climate change and other sustainability challenges – what they call the Industries of the Future – and also look for a strategic response from companies in established sectors.
Why did Henderson Global Investors commission the research?
To enable Henderson to understand how successful their investment strategy was, they commissioned Trucost to undertake a pioneering ‘carbon audit’ of one of its SRI funds, the Global Care Income fund. Henderson believed the audit would demonstrate that an active approach to SRI not only delivers financial returns, but can also bring environmental benefits for investors. The detailed company-by-company analysis of the fund’s holdings also helps to show how investment choices between alternative stock ideas can affect the fund’s carbon performance. Finally, the audit also contributes to Henderson’s goal of constantly improving the transparency of their SRI funds, both in financial and environmental terms.
Report image: Carbon audit: Henderson Global Care Income
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