Under the EU ETS, member states have had limits imposed on their carbon emissions, and each nation has drafted an allocation plan setting limits on individual companies.
In the UK, environmental research company Trucost has just released a report ranking 44 UK mutual funds based on their carbon ‘footprint’ - the CO2 emissions of each fund divided by its size. Trucost’s study covers both socially responsible investment (SRI) and mainstream funds with more than 80 per cent of assets invested in the UK.
“The reason we looked only at mutual funds was because we can only get holdings of those mutual funds,” said Simon Thomas, chief executive at Trucost. “But clearly we would like to see investment consultants looking at the actual performance of fund managers on behalf of pension funds.”
Mr Thomas believes this ranking could be used by fund managers wishing to measure and control the risk of carbon emissions in their portfolios and by investors wanting to compare funds on an environmental basis.
The results of the analysis show that companies with larger carbon footprints do not produce higher returns. “We found no correlation between the amount of CO2 a portfolio was emitting and its investment returns,” Mr Thomas commented. “This does not prove that if you reduce your carbon emissions you make extra returns, but it is certainly saying you don’t need to create large emissions to achieve returns.” The report also found that SRI funds do not necessarily lead to environmentally sound investment.
In a similar move, the UK Social Investment Forum (UKSIF) is launching a two-year programme promoting sustainable and responsible investment among pension funds. Under this initiative UKSIF will contact the pension funds of around 300 UK-listed companies to find out how they incorporate environmental and social principles. Michael Deakin, ex-CIO of Insight Investment and member of the board of the London Pensions Fund Authority, will chair the programme’s advisory committee. He said the time is right for this initiative as non-financial issues are increasingly recognised as a fiduciary concern.
PG
|
