European fund managers outperform U.S. firms on emissions

New research finds that Europe’s largest asset managers are outperforming their U.S. counterparts when it comes to the carbon intensity of their investment portfolios.

A report from MSCI Research examined the carbon footprints of the world’s 10 largest asset managers, which includes seven U.S.-based firms and three European companies representing US$25 trillion in assets under management (AUM).

The research found that the European fund managers had weighted average carbon intensity levels (an efficiency ratio defined as carbon emissions relative to US$1 million in annual sales) of around 150 tonnes of CO2/US$million in sales, compared with around 200 tonnes/$million for the U.S. firms.

“European fund providers generally had more strategies focusing on European companies, which were often better positioned versus their non-European peers in addressing environmental risks,” MSCI said in a release.

The research also found a modest positive correlation between firms’ assets under management and the financed emissions associated with their portfolios.

“Among U.S. fund managers, each US$ trillion invested led to an extra 10-20 tons of CO2,” it reported.

The firm also said that, while total AUM mattered, asset class did not.

“The asset manager exhibiting the highest carbon intensity and financed emissions was a global bond fund manager with significant exposure to emerging markets and high yield debt,” it reported.

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