Transcript Relationship between Style Research and Trucost June

Style Research / Trucost Partnership
June 2008
Overview
• Carbon as an investment issue
• Style Research Trucost Partnership
• Style Research Portfolio Analyzer
– Portfolio Carbon Data
– Sector Data
– Snail Trail
Carbon as an investment issue
• In the green paper on ‘Adaptation to climate change in Europe –
options for EU action’ published in June 2007 it states that ‘a swift
transition to a low carbon economy is the central pillar of the EU’s
integrated climate change and energy policy’. Most countries are not
on track to meet their reduction targets and carbon taxes and an
extension of the EU Emissions trading Scheme are planned.
• Merrill Lynch in a research paper of August 2007 commented ‘we
think a regulatory drive will impact all companies across all sectors,
not just the heavy emitters’.
• America and Australia will have some form of carbon pricing by
2012 and a global scheme appears increasingly likely. Where
carbon pricing has led other environmental factors will follow and
investors need to be aware of the potential impacts of environmental
factors on company valuations.
UBS EU ETS CO2 Price Forecast
• EU ETS CO2 Price per February 2007 is around 20 EUR/t
GEN0190n.ppt
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Style Research Trucost Partnership
• Style Research and environmental research organisation Trucost
have launched a partnership to provide an enhanced analysis of the
carbon performance of portfolios to fund managers worldwide
• For the first time, Trucost’s world-class carbon data is available
through an independent provider of global portfolio analysis. The
partnership means that even more asset managers have direct
access to Trucost data, and can analyse the carbon impacts of
portfolios using holdings-based Style-and-Risk analysis software
• Asset managers can analyse the carbon performance of their equity
portfolios against a chosen benchmark, such as the FTSE All-Share,
S&P 500 or Russell 1000. The analysis indicates the extent to which
a fund’s carbon impact varies from that of the benchmark. Funds
with larger carbon footprints could have greater exposure to carbon
costs imposed by policy measures to address climate change
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Overall output
Portfolio Style Skyline™
5.0
4.0
3.0
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1.6
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-1.7
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Style Factors
High Carbon
6.0
4.8
3.8
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0.7
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Style Distribution
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Utilities
Utilities Style Skyline
2.0
-1.5
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1.5
1.3
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-0.6
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-0.7
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-0.9
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0.7
0.9
0.3
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Style Factors
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Basic Materials
Style Tilts
2008/06/06 Trucost Sample
Carbon Footprint - Trucost [CASA]
3.0
1.0
0.0
-1.0
-2.0
Time Period
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Stock Level Data
Stock level carbon data is available to those clients that
would like to understand in more detail the impact of
carbon on portfolio performance.
You will be able to
• See actual company carbon numbers.
• Build carbon into your standard risk management
• Fully understand your portfolio carbon footprint in order
to report to your clients
• Carbon Optimise a portfolio