A recent report from Trucost, "Carbon Counts USA: The Carbon Footprints Manual," examines the carbon performance of major US mutual funds. The research covers 75 of the nation's largest equity funds and 16 major sustainability/ socially responsible investment (SRI) funds. Analysis of the greenhouse gas (GHG) emissions associated with eight investment styles shows that, overall, sustainability/SRI funds have a smaller carbon footprint than core, growth, value, index, country/regional, equity income, and sector funds. Surprisingly, however, some of the largest SRI funds are among the most carbon-intensive.
Simon Thomas, Trucost Chief Executive, said: "The research findings provide valuable information to fund managers and institutional investors looking to identify exposure to future liabilities from carbon emitted by companies in their funds. Using Trucost data, asset managers can reduce the carbon footprints of funds that employ any investment style to control carbon risks, without sacrificing financial returns."
Funds with large carbon footprints have holdings that could face greater financial risks under GHG cap-and-trade schemes. Companies with "heavy" carbon footprints for their sectors could be the hardest hit. Conversely, carbon-efficient investment funds are set to be well positioned under carbon constraints.