Tuesday, July 28, 2009

U.S. mutual fund discloses carbon footprint

Boston-based Green Century Funds is now disclosing the carbon footprint of its balanced fund, claiming to be the the first retail American mutual fund to do so.

Green Century hired analysis firm Trucost to perform an analysis, which revealed that the carbon footprint of the balanced fund was 66% less than the S&P 500, as of April 30, 2009.

The study found that that the fund's low carbon intensity is attributable to its underweighting or avoidance of the utilities, oil and gas and resources sector.

"The debate over climate change is over. With emissions restrictions pending in the U.S. and internationally, we believe it is in the best interest of our shareholders to recognize and understand the carbon footprint of our fund's investments," says Green Century Funds president Kristina Curtis.

"With the reality of climate change upon us and the economy in flux, it is urgent thqat we move toward a low-carbon, resource efficient and sustainable economy," added Lisa Woll, CEO of the U.S. Social Investment Forum. "We are proud of our member investment firms that are leaders in addressing critical environmental issues."

Trucost's carbon audit involved calculating the direct and indirect greenhouse gas emissions for each company in the Green Century Balanced Fund portfolio. Companies in the portfolio that contributed the most greenhouse gas emissions were Air Product & Chemicals, General Mills and 3M. The fund's top ten holdings as of June 30, 2009 were IBM, AT&T, Xerox, Federal Home Loan Bank of Chicago, General Mills, SLM Corp., Telefonica S.A., Johnson & Johnson, Advance Auto Parts and Oracle Corp.

As far as we know, no Canadian fund has conducted a similar analysis. However, considering the TSX's high exposure to the oil and gas sector, any fund seeking to replicate the performance of the Canadian benchmark would likely score poorly in a carbon audit.

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