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Socially Responsible Investments
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Montréal Pledge – Investors measure their climate footprint
About a year ago, an investor initiative called the Montréal
Carbon Pledge (or in short: Montréal Pledge) was launched with
the support of PRI (Principles for Responsible Investment) and
UNEP FI (United Nations Environment Programme Finance
Initiative). The concept was based on the recommendations of
the reports of the Intergovernmental Panel on Climate Change,
which suggest that greenhouse gas emissions should be cut to
zero by 2100. This might allow the international community to
reach its 2 °C policy target, thus avoiding serious unwanted
environmental and social changes. The signatories of the Montréal Pledge commit to measure and publish the CO₂ footprint of
their investments. Zürcher Kantonalbank is the first (and so far
the only) Swiss bank to have signed the Pledge. The Bank has
almost twenty years of experience in sustainability research for
corresponding investment products. This long-standing expertise
has been further enhanced by the integration of Swisscanto and
its sustainability team. After the implementation of the sustainability indicator for collective investments, the ability to determine the CO₂ footprint – and thus the climate intensity – further
improves the transparency of their investments for Zürcher
Kantonalbank customers.
In the future, however, Scope 3 will have inevitably to be taken
into account.
Sustainable investments: No big boots
The CO₂ footprint measures the total amount of greenhouse gas
emissions caused – directly or indirectly – by an activity. The
challenge in calculating the CO₂ footprint of an investment lies
in the varying definitions of the factors that should enter the
calculation. The Greenhouse Gas Protocol, developed by the
World Resource Institute (WRI) and the World Business Council
on Sustainable Development (WBCSD), defines three levels of
greenhouse gas emissions:
COP21 in Paris as a game-changer?
The ongoing Paris Climate Conference (COP21) is expected to
demonstrate that the voluntary climate targets announced by
the member states of the United Nations Convention on Climate
Change before the conference will not suffice to limit the rise in
the earth‘s temperature to 2 °C. Both the industrial and the
financial sectors are expecting clear signals as to which goals
need to be achieved by when. Only then the necessary changes
can be initiated and financed by appropriate means. For
investors, transparency regarding the CO₂ footprint of
investments is a first step towards the 2°C climate policy target.
Scope 1:
All direct greenhouse gas emissions
Scope 2:
Indirect GHG emissions from consumption of purchased electricity
Scope 3:
Other indirect emissions not covered in Scope 2, outsourced activities
To start with, we decided to consider only Scopes 1 and 2 in
CO₂e, where "e" stands for "equivalent". CO₂e allows greenhouse gas emissions other than CO₂ to be assessed based on
their global warming potential relative to CO₂. For these two
Scopes, data availability is quite good. For the time being, we
leave out Scope 3, where data consistency is not yet satisfying.
Nr. 12, December 2015
Graph 1: CO2 footprint Swisscanto sustainability funds compared to MSCI Indices
(Scopes 1 and 2)
400
T CO2e / Mio CHF Sales
350
300
250
200
150
100
50
0
Swisscanto (CH)
Green Invest
MSCI World
Swisscanto (CH)
Green Invest
Emerging Markets
MSCI Emerging
Markets
Source: Trucost, Zürcher Kantonalbank
The results clear: A strict sustainability approach, as applied in
the Swisscanto sustainability funds, results in a much smaller
CO₂ footprint compared to the underlying benchmark. This
holds true both for industrialized countries (MSCI World) and
emerging markets (MSCI Emerging Markets).
Robert Hauser is Deputy Head of ESG Solutions of the
Asset Management team of Zürcher Kantonalbank. He is
responsible for the fundamental analysis of the utilities
sector, for the sustainability indices on renewable energies
(solar, wind, energy production) and energy efficiency and
generally for climate change issues.
[email protected] / +41 44 292 33 16