DECEMBER 1, 2015: At Trillium Asset Management, we believe that fiduciary duty requires the integration of Environmental, Social, and Governance (ESG) factors into the investment process as a way to identify the companies best positioned to deliver strong long-term performance. We integrate climate risk into our investment process because we believe that climate change is the defining investment issue of our time.
For more than two decades, we have had an active shareholder advocacy campaign focused on getting companies to make commitments to energy efficiency, Green House Gas emissions reduction targets, and purchasing alternative energy.
Across all of our portfolios we have a low-carbon focus, eliminating all coal companies, companies with tar sands exposure (greater than 10%), and identifying leaders in the energy sector. As of September 30, 2015, approximately 50% of our assets under management are in products designed to be fossil fuel free. As part of this focus on the impact of climate change, we believe that carbon footprinting is an essential step in understanding the carbon risk of a portfolio.
In signing the Montréal Pledge, Trillium has joined investors who share our belief that as “institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that there are long-term investment risks associated with greenhouse gas emissions, climate change and carbon regulation”.
While Trillium has previously measured the carbon footprint of some of our investment strategies, we are now measuring the carbon footprint of all of our equity investment strategies because it is important for us to more thoroughly understand, quantify and manage the carbon and climate change-related impacts, risks and opportunities in our investments.
For our September 30, 2015 measurement, Trillium used the Bloomberg Portfolio Carbon Footprint tool, which allows users to measure and compare portfolio carbon emissions. It utilizes emissions data taken directly from company reports, as well as Carbon Disclosure Project (CDP) data. The analysis is based on measuring the tons of carbon emissions per million dollars of revenue of the companies held by the strategy and those of the companies included in the corresponding benchmark index. Figures from companies which don’t disclose are estimated used sector or industry averages are normalized by revenue.
You can read more about the carbon impact of our investments here.