August 29, 2013
Alliance Trust Investments Measures Carbon Footprints of its Funds
by Robert Kropp
The UK investment firm’s analysis reveals that three of its sustainable equity funds emit less than
half the carbon dioxide of their benchmarks.
The UK-based investment firm Alliance Trust Investments has measured the carbon intensity of three of its
Sustainable Future equity funds, and found that on average the three funds emitted less than half
the carbon dioxide (CO2) emitted by their benchmarks.
Allocating capital in favor
of companies that emit less CO2 “can be seen as a proxy for better run, efficient companies that
can gain a broad competitive advantage in a resource constrained, rising energy price environment
or in the event of increased regulation on big CO2 emitters,” Alliance stated. “The portfolio would
have to pass on less of their CO2 related costs to their customers than the market to retain the
same level of profitability and are therefore less at risk from tightening regulation to curb
greenhouse gas emissions.”
“If you can generate similar or better than the market
investment returns by investing in companies that emit significantly less CO2 than average, then
this way of investing can be seen as less damaging to our collective environment, less at risk from
regulation to curb CO2 emissions and a more a sensible and proactive way of investing,” Mike
Appleby of Alliance wrote.
Trucost's analysis of the Green Century Balanced Fund found that companies
in the Fund's current portfolio emit 126 tons of carbon dioxide equivalent (CO2-e) emissions for
every $1 million of revenue generated, which is 66% less than the benchmark of companies in the S&P
500. Three companies in the portfolio—Air Products and Chemicals, General Mills, and 3M—were found
to account for 28% of the portfolio's carbon footprint, but only 5% of its value.
analysis, the Green Century Balanced Fund became the first US-based mutual fund to disclose its own