Publication / 06 Jun 2014

Portfolio Footprinting to Manage Carbon Liabilities

Pax World Investments asked Trucost to conduct a carbon audit of its five largest equity funds in 2013 to drive understanding of embedded carbon emissions and potential regulatory, litigation and reputational risks.

Climate change creates a variety of risks for investors including physical risks from a warming climate, reputational risks from increasing public pressure, and regulatory risks driven by the implementation of legislation in many regions.

While investors are beginning to recognize the systemic risks presented by climate change, this is by no means universal, and it is likely that very few investors have fully integrated these risks in their portfolio management. This case study was intended to summarize how investors can identify and manage carbon liabilities embedded in their portfolios.

Trucost’s analysis found that the Pax World Global Environmental Markets Fund was 25% less carbon intensive than its benchmark MSCI World due to a combination of 37% negative sector allocation effects and 62% positive stock selection effects. It identified opportunities for Pax to improve the environmental disclosure of its high impact holdings through company engagement. Following Trucost’s analysis, Pax was able to make its Pax World Global Environmental Markets Fund carbon neutral.

3 February, 2020
Events Green Finance Summit – Phoenix – 3 – 4, 2020

The GreenFin Summit follows a successful launch event in 2019. That invitation-only event brought together 100 corporate sustainability leaders, major public-sector pension fund executives and leading financial institutions, with over a trillion dollars of combined assets under management. The discussion broached vital topics in ESG that will be expanded upon at the 2020 Summit. Richard Mattison...

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How could the interplay between regulatory transitional risks and physical risks impact the performance of companies across sectors and geographies?

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