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Environmental research firm Trucost hopes the results of its just-released report “Carbon Counts USA” will close the gap now that fund managers can access the data to measure financial risk exposure from future carbon constraints, such as climate change legislation and a greenhouse gas cap-and-trade program. The company ranked the country’s 91 largest mutual funds, with holdings worth $1.55 trillion, based on their carbon footprints.
“The data hasn’t been available before, so in a sense, they’ve been flying blind,” Simon Thomas, Trucost’s chief executive, said during a conference call Wednesday.
Mutual funds with large carbon footprints will likely become big losers in a carbon-constrained economy because a price on emissions will increase operating costs for companies with intensive fuel sources and processes. Most, if not all, companies will see their energy costs grow. Funds with the smallest footprints are will be impacted the least.
Carbon-intensive funds like the Fidelity Capital Appreciation Fund, for example, could be subject to costs of nearly $125 million, or 3.32 percent of revenue, if the price of carbon is factored in, Trucost said. The company used a cost of $28.24 per metric ton as the basis for this calculation.
In comparison, the most carbon-efficient fund, the Financial Select Sector SPDR Fund, would be subject to $8.3 million in carbon costs under the same scenario.
There is no correlation between carbon footprint and performance, Trucost said. Rather, such a correlation won't materialize until a global carbon market is put in place.
The study analyzed the funds based on eight investment styles: core, growth, value, index, country/regional, equity income, sector and sustainability/Socially Responsible Investment funds. As a whole, the portfolios of the 91 funds generate about 615 million metric tons of greenhouse gas emissions.
The carbon footprint of the combined 91 funds measured in at 335 tons of carbon dioxide per million dollars of revenue. The carbon footprints of the S&P 500 and MSCI Europe funds were virtually identical: 384 and 383 tons of emissions per million dollars of revenue.
Surprisingly, the Sentinel Sustainable Core Opportunities Fund -- an SRI fund -- had the fourth largest carbon footprint of the funds analyzed, with 692 tons of carbon dioxide equivalent produced per million dollars of revenue. Overall, however, the aggregated SRI funds had portfolios that produced just 226 tons of emissions per million dollars of revenue.
The top five most carbon-efficient funds don’t invest in the utilities and oil and gas sectors. Instead their holdings are concentrated in lower-carbon financial services, banks and health care. Trucost declined to publish the full rankings of all 91 funds but said it may do so in the future.
The most carbon-efficient funds are:"Image" -- Licensed by stock.xchng user svilen001.The most carbon-intensive funds are:
- Financial Select Sector SPDR Fund -- 40 tons of CO2 equivalent (tCO2e) per million dollars in revenue
- Vanguard Health Care Fund -- 48
- PowerShares QQQ Trust -- 69
- Ariel Appreciation Fund -- 98
- Oppenheimer Global Fund -- 111
- iShares FTSE/Xinhua China 25 Index Fund -- 1,549 tCO2e per million dollars in revenue
- Fidelity Capital Appreciation Fund -- 758
- Janus Fund -- 744
- Sentinel Sustainable Core Opportunities Fund -- 692
- Energy Select Sector SPDR Fund -- 613
Managing your organization's
Managing your organization's carbon footprint is about reducing risk. Always has been. The happy PR element is a bonus. It's great to see studies like this one that measure that risk level for investors.
sustainable expert
as previsiously stated and now clearly we can all see the trillion dollar figure which is now clearly coming into focus.this is why vp chaney changed the climate research report several times and will be held accountable even when chaney is in the grave as i stated more than 5 yrs ago..the liability figure advances by the day and a trillion dollar liability figure is the tip of the ice berg as we will factor in climate change insurance,emitted co2 gases,cap and trade, the fossil fuel industry received tax benefits that will be wiped out under the obama industry.
pay close attention all you yeahoo ceos that hired lobbyists and see your entire industry fall by the way side from your failed leadership.the day of accountability is arriving fast and there is no where to hide your head in the sand.with over 300 green lobbyists on the scene at washington educating the legimately elected green visionary leader.and where is carl rove the architect when the usa invaded syria less than 10 days before an election to use the war as the only tool to hang on to political power?lets go jeb bush as the financial liability can now fall on your back and your brothers backs neil for silverado and george for 8 failed years.talk to me banner...