CO2 equation unveiled for Swedish funds industry

The Swedish Investment Fund Association (Fondbolagens förening) has published a CO2 equation that its members will be using to calculate the carbon intensity of their investment activities, as part of a move to faciliate comparisons between funds on the basis of the carbon emissions from underlying holdings.

Currently there are a number of fund providers in Sweden that account for carbon emissions from their funds’ holdings. However, there is a lack of coordination and data to facilitate comparisons between funds, the Association says. It has therefore decided to implement a pathway to coordinated accounting of carbon emissions, which can lead to improved information for investors, but which also explains the limitations caused by current accounting standards for funds.

CO2 per krona earned, weighted by capital

The Association’s proposed equation is intended to identify the carbon intensity of funds, where a low figure means that the fund generally has invested in companies that exhibit low emissions in relation to their earnings. However, the work is ongoing and the relevant method of accounting will progress as data and methods are developed, the Association said.

The equation and related calculations are intended to sit on the homepage of fund companies that are members of the Association, in the annual reports of funds, or in separate reports where the limits of the measurements are explained.

“This should be seen as an important first step from the fund industry side, and to begin with is above all a measure that together with other sustainability information can lay the ground for dialogue with fund managers. So far the pre-conditions are not in place for a simple [labelling] of funds. Now we need to work together – industry associations, companies, scientists and politicians – to ensure we get better reporting of emissions data from companies and accounting methods that mean investors can know which of their choices will have a real impact on sustainable development,” said Fredrik Nordström, chief executive of the Association.

He added that this type of development was of crucial importance for coming generations and that it is clearly becoming increasingly important for investors. Recent survey-based research by TNS Sifo Prospera suggests that 23% of Swedish fund investors have chosen a fund because of its approach to sustainability. Some 29% have said that they do not wish to invest in funds that are invested in ‘un-ethical’ holdings.

 

 

 

 

 

 

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