Montréal Pledge

PRI Montreal Carbon Pledge

About the Montréal Carbon Pledge

The Montréal Carbon Pledge was launched on 25 September 2014 at the “PRI in Person“ meeting in Montréal. This initiative is supported by PRI (Principles for Responsible Investment) and UNEP FI (United Nations Environment Programme Finance Initiative). The Montréal Pledge tries to facilitate a higher degree of transparency in connection with the carbon footprint of equity portfolios and wants to contribute to its reduction in the long run. As the first investment company in Austria, Erste Asset Management has decided to sign the agreement.

By signing the Montréal Pledge investors undertake to measure and publish the carbon footprint of their portfolio on an annual basis.

According to the CO2 data of our research partner MSCI ESG and Bloomberg, and our ESG research team, the CO2 intensity of the Erste AM equity mutual funds is at 77,4 % of the footprint of the Global equity market index (31.12.2017). This calculation takes into account our traditional regional and country funds as well as our thematic and sector funds. Therefore the comparison with the Global equity marke is only a general guide value.

CO2 Emissionen im Vergleich

The comparison with the responsible equity funds of Erste Asset Management yields interesting results. According to these calculations, ERSTE RESPONSIBLE STOCK GLOBAL, as flagship among the responsible funds, comes out with a CO2 exposure of  of the Global equity market. This highlights the importance of title selection in the sustainability process.

Chart: Comparison CO2 Emissions

Analysis of the Global equity market index

The comparison of the various economic regions of the developed markets shows that North America is home to the most CO2-intensive listed companies. This is corroborated by the comparison of the CO2 emissions in the utility or energy sectors. The juxtaposition of the companies of these sectors of the MSCI North America and of the MSCI Europe reveals the origin of the following results.

Chart  CO2 foot print global equity markets

A breakdown by country highlights the whereabouts of CO2-intensive companies and sectors even more clearly. In Europe for example, the countries are Finland and Norway. Austria is ranked fifth.

Chart CO2 Intensity by region

Calculation method of the CO2 footprint of a portfolio

Erste AM establishes the CO2 footprint of its portfolios in a multi-step process: external rating agencies calculate the greenhouse emissions for all securities in the respective fund. Then the weighted average of the emissions of the securities held are calculated for each fund portfolio. The experts establish the total footprint of the measured equities held by Erste Asset Management by assigning weights across all funds, with the weights resulting from the share of the respective fund in terms of total assets under Erste AM’s management. The CO2 footprint accounts for the emission of all six greenhouse gases as defined by the Kyoto Protocol. The emission of the various gases is translated into a carbon dioxide equivalent (tCO2e: tons of carbon dioxide equivalent) to ensure the different gases are comparable in terms of their harmful effects on the climate at one glance. In order to facilitate comparability between companies of different sizes the emission of the carbon dioxide equivalent is related to sales in millions of USD. This standardisation is defined as CO2 intensity.

Data sources: MSCI ESG and Bloomberg