The carbon footprint as an instrument for measuring impact: a review
Climate protection has arrived in the financial sector, not least due to the EU action plan "Financing Sustainable Growth". Banks and credit institutions are thus facing major challenges, as they play a key role in the necessary transformation of the economy - keyword decarbonisation. The goal is to steer capital flows in the direction of sustainable, low-carbon economic development. So how can the contribution of the financial sector to climate protection be assessed?
In order to make an initial sustainability assessment in the financial sector, the instrument of the carbon footprint can be used. For example, the carbon footprint can be determined for a financial portfolio. The carbon footprint refers to all the greenhouse gas emissions that a portfolio generates as a result of the securities it invests in. The objective is to reduce this footprint over time or in comparison to another portfolio or benchmark.
How will the carbon footprint be calculated and what are the challenges in measuring it? These and other questions were explored in a current webinar held by ÖGUT - Austrian Society for Environment and Technology on behalf of the Ministry of Climate Protection on 1 June 2022.
Josef Behofsics welcomed the participants to the online event on behalf of the Climate Protection Ministry and handed over to Katharina Muner-Sammer from ÖGUT, who led the event. The first input for the webinar was provided by Raphael Fink from the VKI Ecolabel team.
He presented the results of an analysis on the topic of "Carbon Footprint: UZ 49 - Sustainable Financial Products". In this study, the VKI investigated the question to what extent ecolabelled equity funds differ from conventional equity funds with regard to the carbon footprint. In this study, the carbon footprint of 53 eco-label certified equity funds, 15 sustainability funds without Ecolabel certification and 15 conventional funds were calculated and compared with each other. One result of the analysis was that an investment in a sustainable equity fund with an Ecolabel resulted in 72 percent lower emissions on average than an investment in a conventional equity fund. Further results of the study can be read here: https://www.umweltzeichen.at/de/produkte/finanzprodukte/nachhaltige-finanzprodukte-unter-der-lupe.
The following contributions showed examples of CO2 measurement from practice. On the one hand, Wolfgang Pinner, Head of Sustainable & Responsible Investment at Raiffeisen Capital Management, gave an insight into the "impact measurement" of sustainable investments with the help of the carbon footprint at RCM. On the other hand, Anthonio Rätz explained the approach of the German GLS Bank to the issue of impact transparency. GLS Bank determines the CO2 emissions of its investment and loan portfolio as a basis for its further analyses on compatibility with the 1.5°C target. Basically, it became apparent that the results of the CO2 footprint calculations depend on both the available data of the companies and the different calculation methods. In the future, it can be assumed that the data available to companies will become increasingly better, more valid and more meaningful. Nevertheless, the carbon footprint can only be an instrument for measuring the impact of a financial portfolio; the carbon footprint always "only" shows a retrospective of the CO2 emissions of companies.
After the presentations, the numerous webinar participants had the opportunity to ask their questions. At the end of the webinar, Josef Behofsics and Katharina Muner-Sammer thanked the speakers and all participants of the event and referred to the next event of this webinar series at the beginning of July on the topic of insurance & sustainability.
The individual presentations and the recording of the webinar are available for download on the ÖGUT website: https://www.oegut.at/de/events/2022/06/uz-webinar-carbon-footprint.php
Title written by Susanne Hasenhüttl and Katharina Muner-Sammer, ÖGUT