Asian firms are more carbon intensiveMarch 2008
Asian listed companies are more carbon-intensive than their peers elsewhere in the world – with the result that investors in Asian equity funds are more exposed to carbon risks.
A new report reaches this conclusion but points out that the equity funds could switch investments without any loss in performance.
The report, Carbon Counts Asia 2007: Carbon Footprints of Asian Investment Funds, was commissioned by the International Finance Corporation and conducted by the environmental research organization Trucost. It gives the first comprehensive review of Asian companies’ greenhouse gas emissions by analysing the carbon intensity of the MSCI Asia ex-Japan Index and 90 individual Asian investment funds.
Investors, says the report, are the main drivers because they pick companies that are more carbon-intensive than the average.
It warns, however, that investors in carbon-intensive companies in the utilities, basic resources and industrial goods and services sectors could be most at risk from the introduction of a price for carbon and shifts in demand to low-carbon, more resource-efficient suppliers.
One key finding was that the carbon footprint of the MSCI Asia ex-Japan Index is 620.99 tonnes of greenhouse gas emissions per $1million (£508,000) invested.
Another was that the 90 funds had at least 90 per cent of their holdings by value in China, Hong Kong, India, Indonesia, Malaysia, Pakistan, South Korea, Singapore, Taiwan, the Philippines and Thailand. The funds are responsible for annual emissions of more than 40.6 million tonnes of greenhouse gases.
The report adds that returns would be unaffected if investment policies were adjusted to cut carbon impacts. One estimate is that these investment changes could reduce carbon intensity by 30 per cent.
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