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August 29, 2013

Alliance Trust Investments Measures Carbon Footprints of its Funds
    by Robert Kropp

The UK investment firm’s analysis reveals that three of its sustainable equity funds emit less than half the carbon dioxide of their benchmarks. -- The UK-based investment firm Alliance Trust Investments has measured the carbon intensity of three of its Sustainable Future equity funds, and found that on average the three funds emitted less than half the carbon dioxide (CO2) emitted by their benchmarks.

Allocating capital in favor of companies that emit less CO2 “can be seen as a proxy for better run, efficient companies that can gain a broad competitive advantage in a resource constrained, rising energy price environment or in the event of increased regulation on big CO2 emitters,” Alliance stated. “The portfolio would have to pass on less of their CO2 related costs to their customers than the market to retain the same level of profitability and are therefore less at risk from tightening regulation to curb greenhouse gas emissions.”

“If you can generate similar or better than the market investment returns by investing in companies that emit significantly less CO2 than average, then this way of investing can be seen as less damaging to our collective environment, less at risk from regulation to curb CO2 emissions and a more a sensible and proactive way of investing,” Mike Appleby of Alliance wrote.

Speaking to Green Century Capital Management began using environmental analyses provided by Trucost to measure the carbon footprint of its Green Century Balanced Fund.

Trucost's analysis of the Green Century Balanced Fund found that companies in the Fund's current portfolio emit 126 tons of carbon dioxide equivalent (CO2-e) emissions for every $1 million of revenue generated, which is 66% less than the benchmark of companies in the S&P 500. Three companies in the portfolio—Air Products and Chemicals, General Mills, and 3M—were found to account for 28% of the portfolio's carbon footprint, but only 5% of its value.

With the analysis, the Green Century Balanced Fund became the first US-based mutual fund to disclose its own carbon footprint.

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