ET Carbon Footprint Analysis

ET Carbon Policy Tracker

Shifting climate policy is acknowledged by Mercer to contribute as much as 10% to overall portfolio risk. Arguing that it could represent a far higher proportion of overall portfolio risk, ET Index is working hard to support investors who wish to increase and enhance their understanding of regulatory changes and policy developments at the national and international level which explicitly or implicitly price carbon.

According to the World Bank there are now around 40 countries and 20 cities, states and provinces using or planning to use a direct price on carbon to bring down greenhouse gas emissions. Altogether, the initiatives in operation today are valued at almost $50 billion, according to the World Bank and Ecofys’s Carbon Pricing Watch, an early brief previewing the annual State and Trends of Carbon Pricing report.

The Carbon Policy Landscape

The public policy and legal architecture around carbon is maturing. Constraints on carbon are advancing, intensifying at the subnational, national and international level.

Institutional investors in France will be required to report the carbon footprint of their portfolios, for example. With article 48 in force institutional investors will have to disclose the following in their annual reports:

The financial risks linked to the effects of climate change;
The measures they have adopted to reduce those risks; and,
The consequences on climate change of the company’s activities, that includes the use of goods and services produced.

Institutional investors in France will also have to inform their shareholders on how they incorporate ESG into their investment decision-making process and on the means implemented in order to contribute to the financing of the energy transition. This shift from voluntary mandatory disclosure requirements is set to continue.

The longer the delay in implementing comprehensive and coordinated climate policy, the higher the future cost of carbon.
In jurisdictions with fragmented and heterogeneous carbon policies it is reasonable to assume that when coordinated measures are eventually introduced they will engender ‘carbon price shock’, particularly for those carbon-intensive companies operating within them.
As the Global Investor Coalition on Climate Change recently highlighted, climate policy creates opportunities in asset classes and markets that investors may currently have little or no exposure to. It also increases the risk that existing assets might suffer declines in values and/or become more volatile.

ET Carbon Policy Analysis

ET Index Research is mapping, monitoring and comparing commitment to carbon reduction across jurisdictions so investors can make informed and timely decisions underpinned by robust qualitative and quantitative analysis.

Subscription to the ET Carbon Policy Analysis provides investors with the following metrics and insights:

A relative country ranking - which scores countries on their level of commitment to carbon reduction demonstrated at the national and international level.
Comprehensive coverage of mitigation & adaptation policies.
A synthesis of the most pertinent academic literature.
A survey of measures which indirectly price carbon (e.g. reporting standards, measures to support energy efficiency, renewable energy, research and development in low-carbon technologies, policy measures to support the level of uptake and deployment of renewable energy etc.).
Materials to underpin engagement with policy makers.

To register interest in this service please email [email protected].