Publication / 18 May 2018

Carbon Scorecard 2018

This year’s Carbon Scorecard adds two fixed income benchmarks to the the 2017 assessment of 10 equity benchmarks, and we introduce a new metric: carbon price risk exposure. Developed by Trucost, this metric helps investors understand how companies, and ultimately portfolios and indices, are exposed to the risk of governments imposing a price on carbon emissions.

The Carbon Scorecard stands as a barometer for the carbon intensity of financial markets today and its relation to the direction of the economy.

The scorecard reflects increasing market interest in understanding the exposure of investments to a range of carbon indicators. Understanding carbon risks and their potential financial impact is crucial if we are to avoid sudden and inconsistent write-downs of assets and redirect capital toward activities that are aligned with global climate commitments, hence it is now considered best practice to report on portfolio exposure to carbon even in markets where guidance is lacking.

A new metric has been added this year: carbon price risk exposure. This metric, developed by Trucost, helps investors understand how companies, and ultimately portfolios and indices, are exposed to the risk of governments imposing a price on carbon emissions. And for the first time, the 2018 Carbon Scorecard assessment includes two fixed income benchmarks in addition to the usual 10 equity benchmarks, providing a broader perspective on the carbon exposure of global financial markets.

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