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Fund company Banco: Forest companies are the largest carbon emitters

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Issue date: 
December 25, 2010
Publisher Name: 
Timber Community
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When the fund company Banco would make their environmental funds carbon-neutral, they discovered that two forest companies accounted for half of the funds' carbon dioxide emissions writes dn.se.
The forest companies, SCA and Stora Enso looked like real environmental villains in comparison with other companies according to Banco. - They must become better at managing their emissions or we will eventually reduce our holdings in the companies, "said Sacha Beslik to DN.se

On the contrary traditional engineering companies set the standard in carbon emissions according to Banco. But there is a problem that so few Swedish companies have a climate strategy, "said Sacha Beslik, head of ethics analysis at Banco to the newspaper.

One explanation why logging companies have a big impact on carbon is that their production today is highly energy consuming. Pulp mills require a lot of electricity and energy, and forest companies are doing much to improve the efficiency and reduce carbon dioxide emissions. But Sacha Beslik believes forest companies can adapt their production so that it becomes much more energy efficient. He has previously said that he believes that the large emissions from Stora Enso's is because the target group is not the consumers, which often require environmental improvements.

Banco funds have ethical and non-profit funds in its portfolio and is part of the Swedbank sphere. Banco has started two environmental funds which are carbon-neutral. Together, the funds under management approx. 56 million Euro (500 million SEK) of Banco's total 1.9 billion Euros (17 billion SEK) in management. The funds invest in large listed companies that are ranked according to the evaluation model developed by Banco and Innovest Strategic Advisors Foundation. The companies in this model are judged to be winners in a future environmentally friendly recycling society.

Innovest Strategic Value Advisors released already in 2007 a study on the relationship among climate change, companies' ability to manage the associated risks and opportunities, and their financial performance. The study is the first of its kind in the world, and lays the foundation for further research and investment products.

Among the 2007 study's key findings:

  • Companies' risk exposures to climate change varies widely, both between and even within different industry sectors and geographic regions
  • Companies with the most robust risk management architecture and ability to seize competitive opportunities on the upside have tended to out-perform their same-sector peers financially over the past three years
  • The "Carbon Beta(c) premium" for leading companies appears to be growing larger over time, as regulatory regimes tighten around the world
  • Non-verified, company-provided information provides an extremely poor and limited basis for actual investment decisions. More in-depth company research is clearly required

In introducing the study, Innovest founder and Chief Executive Matthew Kiernan commented:

"As the authors of each of the Carbon Disclosure Project global reports in the five years since its inception, we at Innovest are only too aware of the power and importance of company disclosure. However, we have also believed for many years that self-reported, non-verified data supplied by the companies themselves is, by itself, a woefully inadequate basis for actual decisionmaking by sophisticated investors. The results of this study would seem to bear that out.


Extpub | by Dr. Radut