Climate impact of portfolios

24 October 2016

impact-climat-des-portefeuillesThe financial sector has a major role to play in the energy and climate transition. This transition will mean revising traditional financing decisions to shift support to sectors and organizations as they “decarbonize” the economy and to accompany energy-intensive sectors as they reduce their greenhouse gas (GHG) emissions.

Organizations in finance are increasingly aware of the urgency of the transition, and of the risks attached to failure to respond to this imperative, and climate change criteria are progressively being taken into account in this sector.

With close to 10 years of experience with these issues, Carbone 4 has devised methodologies specifically for organizations in finance. They can measure the impact of induced emissions (scopes 1+2+3) to assess exposure to transition risk, and the impact of avoided emissions, as well as avoided emissions under the same scopes, measuring contribution to the energy and climate transition.

Our services

Carbon Impact Analytics

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Private Equity

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Green bonds

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Infrastructures

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Low carbon indicators

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Carbon Impact Analytics

Carbon Impact Analytics

Carbon Impact Analytics is a methodology for evaluating the carbon impact of listed assets (stocks and bonds). It uses, among others, the carbon footprint scopes 1+2+3, and a measure of contribution to the energy transition (avoided emissions).

Private Equity

Carbone 4 also evaluates unlisted assets, deploying a purpose-built approach to each portfolio. Our approach highlights:

  • Participations exposed to risk in the context of the energy transition
  • Ways to pragmatically take this transition into account to improve the portfolio
  • Strong points to be emphasized and valuated for participations that generate avoided emissions
  • Key references: PAI Partners, SWEN Capital Partners.
Green bonds

While green bonds are today an effective tool for channelling investment to “green” projects, there is room for progress in this sector. Carbone 4 is committed to driving this progress, and has developed a climate impact reporting methodology for green bond funds (induced and avoided emissions, scopes 1+2+3), to:

  • Create value from funds’ positive climate impacts
  • Highlight the green bonds that generate the largest amounts of avoided emissions
  • Fill in the gaps in current emission reporting
  • Key reference: Mirova, filiale ISR de Natixis.
Infrastructures

Infrastructure is a very important factor in the energy transition, and from the beginning Carbone 4 has naturally taken an interest in this aspect. Today Carbone 4 offers an evaluation methodology to assess the carbon stakes of infrastructure assets, in order to:

  • Report climate impacts at project scale or across an entire fund (induced and avoided emissions, scopes 1+2+3)
  • Highlight the impact of each project phase (construction, operation, use)
  • Guide 2°C investment strategy
  • Key references: Caisse des Dépôts et des Consignations, AFD, SWEN Capital Partners.
Low carbon indicators

The market for low carbon indicators is rapidly growing, but in some cases the robustness of these indicators from the viewpoint of climate impact remains to be demonstrated. With expertise in measuring the impact of investments, Carbone 4 advises clients for the construction of custom low carbon indices designed to:

  • Fine-tune sectoral allocation to align with a 2°C trajectory
  • Select the most relevant assets, using a best-in-class approach based on Carbon Impact Analytics indicators
  • Key reference: Euronext
  • For more information download our report on low carbon indicators.