Herds on Green Meadows – The Decarbonization of Institutional Portfolios

Benz, Lukas; Jacob, Andrea; Paulus, Stefan; Wilkens, Marco

doi:10.2139/ssrn.3461683

Cited by 1 publication

(1 citation statement)

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“…Therefore, the investment behavior of these leading asset managers could exert widespread and far-reaching impacts on the future global nanced carbon emission landscape. Moreover, investing in decarbonization may trigger followerup trades by other investors resulting in herding behavior 19 . Further studies should provide a more detailed analysis.…”

Section: Discussionmentioning

confidence: 99%

Embodied carbon emission in the industrial equity portfolios of the leading global asset managers

Guan

Chen

et al. 2023

Preprint

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Investors, hidden at the top of the global supply chain, are the key beneficiaries of the entire chain. However, they appear to generate only a small number of direct emissions which may obscure the reality that they should undertake more climate responsibility. No systematic accounting and disclosure of carbon emissions are incorporated in the financial institution assets. Here, we examine the embodied carbon emissions of the 380 leading global asset managers, using industrial equity portfolios as an example, and show that the embodied carbon emissions of these companies' industrial portfolios have reached 636.97–875.88 MtCO2-eq, and are expected to rising rapidly in 2019. Over 90% of the financed carbon emissions were embodied in the industrial equity portfolios of the top 20 asset managers in North America and Europe. Meanwhile, weighted average carbon intensity (WACI) and carbon emission to revenue (CETR), reflecting institutions' carbon exposure and efficiency, have not decline tremendously over the last decades, despite divestment only occurring in a few typical high carbon-intensive industries. Moreover, the leading investee companies in the emissions embodied in the industrial equity portfolio were highly contributed by the leading investee companies in high carbon-intensive sectors. In the study, we propose an accounting framework that integrates macro-sector emissions data with micro-financial data to attribute carbon emissions embodied in equity investment activities to investors, which can inform targeted and effective climate reporting and action. Some large asset managers, for instance, play a pivotal role in portfolio investments' carbon emissions and therefore bear more responsibility for decarbonization equity portfolios.

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Section: Discussionmentioning

confidence: 99%