Several Trucost clients won awards at the recent 2° Invest Award event organized by the French Ministry of Environment in collaboration with the 2° Investing Initiative.
The awards highlighted best practice in investor disclosure on climate change and focused on assessment of climate-related risk exposure, contribution to achieving international climate objectives such as the Paris Agreement, integration of climate-related considerations into investment and engagement policies, and communication to clients and stakeholders.
Thirty applications were received and were assessed by a jury of investor organizations, advocacy groups, politicians and civil servants chaired by Ségolène Royal, France’s Minister of Environment, Energy and the Sea. Article 173 VI of the French Energy Transition Legislation requires investors to report the carbon footprint of their portfolios and comment on the energy alignment in relation to internationally agreed targets.
Integrating climate change analysis
One of the awards for best global reporting went to AXA Group. Trucost worked with AXA’s investment management business to provide data on corporate environmental impacts in order to help it integrate climate change analysis into its investment process. AXA IM also wanted to encourage companies to manage and improve their environmental efficiency, in line with their objectives as a responsible investor.
Australian Ethical and Ircantec won awards for best reporting on alignment with climate goals. Australian Ethical has reported its carbon footprint for the past three years using Trucost’s data, starting with Australian equity before including international shares. The data showed that its portfolio was about 40% less carbon intensive than its index benchmark and was a result of Australian Ethical’s investment approach.
Trucost helped Ircantec better understand the implications of Article 173 for its investments and also used our data to engage with companies. Ircantec voted against resolutions at some of its portfolio company AGMs due to the lack of clarity on their strategy on energy transition. For the first time, Trucost also provided Ircantec with an assessment of the avoided emissions of the green bonds in their fixed income portfolio and an assessment of the green and brown share exposure of their equity and fixed income portfolios.
Following a two degree pathway
Best reporting award for the assessment of climate risks went to the Environment Agency Pension Fund – a long-term client of Trucost. To ensure that its investments are compatible with keeping the global average temperature increase to below 2°C, by 2020 the Fund aims to invest 15% of its assets in low carbon, energy efficient and other climate mitigation opportunities and decarbonize its equity portfolio, reducing its exposure to future carbon emissions by 90% for coal and 50% for oil and gas. Trucost’s annual Carbon Metrics Report helped the Environment Agency Pension Fund set these targets and monitor progress towards achieving them.
Special mentions at the awards included Trucost clients Aviva, ERAFP, Group Caisse des Dépôts and Sycomore AM. Swedish state pension buffer fund AP4, which uses carbon efficient indices from S&P Dow Jones Indices powered by Trucost data, also received a special mention.
Trucost measured the carbon footprint of French public service pension fund manager ERAFP’s portfolio, including its sovereign bond assets through a partnership with ratings agency Beyond Ratings, to illustrate the exposure of its portfolios to the risks associated with climate change. The insights enabled ERAFP to understand the changes needed to align its portfolio with a 2°C scenario.
From 2016, Caisse des Dépôts will not invest in companies that derive more than 20% of revenues from thermal coal mining and coal power generation. Trucost is the leading provider of thermal coal exposure data.
Sycomore Asset Management discloses the carbon intensity of its funds using Trucost’s corporate environmental data. Trucost’s environmental impact ratios are also used by Sycomore analysts to assess companies eligible for the Sycomore Eco-Solutions fund which focuses on companies with business models that contribute to the environmental and energy transition. In 2017, Trucost and Sycomore will further expand their collaboration by conducting detailed analysis of the exposure of European companies to green and brown products and services.
For Aviva, Trucost carbon footprinted four equity portfolios as well as producing an aggregate footprint to inform the company’s strategy to manage its climate change impacts.
Market leading data provider
Further evidence that Trucost is the ‘go to’ provider of environmental data, analytical tools and services was published in a review of the Montréal Carbon Pledge by Novethic in September. It found that Trucost was the most frequently cited specialist data provider among the 120 signatories with a market share of over 50%.
In October, one of the world’s leading indices providers S&P Dow Jones Indices acquired Trucost, signaling growing demand among financial institutions for environmental, social and governance (ESG) solutions.