With a carbon cap-and-trade program on the horizon, investors should be aware of the great disparity in carbon risks associated with leading U.S. mutual funds, according to a new report.
Environmental research firm Turcuost examined the carbon performance of 75 major U.S. mutual funds and 16 socially responsible investment funds (SRI), finding that the most carbon-heavy fund to be 38 times more carbon-intensive than the least carbon-intensive fund.
Analysis of the greenhouse gas emissions associated with eight investment styles shows that overall, sustainability/SRI funds have a smaller carbon footprint than core, growth, value, index, country/regional, equity income and sector funds. However, some of the largest SRI funds are among the most carbon-intensive analyzed, reflecting the diverse environmental, social and governance criteria used by managers.
"Carbon emissions are a financial issue that will soon have a real price in the US, and companies and shareholders will likely bear a percentage of this cost in the future. Fund managers and asset owners can use carbon analysis to protect their assets from these costs," report author James Salo said.
The report, Carbon Counts USA, can be downloaded for free (after registration) at the link below.
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