Funds comprising companies that are carbon-efficient relative to sector peers may be less exposed to escalating carbon liabilities. Funds with low carbon intensities will be better placed for sustained returns from companies that will be well-positioned under carbon constraints. The report highlights some of the tools and opportunities available to investors to manage fund carbon risks. Trucost outlines how the index provider Standard & Poor’s and financial firm UBS are using carbon data to create investment strategies with reduced carbon intensity and exposure to carbon liabilities.
The combined global emissions associated with fund holdings analysed amount to over 615 million metric tons of greenhouse gases. This is equivalent to 8.6% of US emissions in 2007.
For each million dollars of revenue generated by companies in the S&P 500, 384 metric tons of greenhouse gases are emitted. The carbon intensity of the S&P 500 is slightly higher than that of the MSCI Europe Index and more than 50% lower than the relatively carbon-intensive MSCI Asia ex-Japan Index.