The Carbon Footprint of Capital Investments - adelphi

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adelphi • The Carbon Footprint of Capital Investments adelphi • The Carbon Footprint of Capital Investments
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List of illustrations and tables
1 Introduction
Figure 1 Areas covered by the GHG Protocol 009
Figure 2 Average breakdown of the greenhouse gas intensities of various 011
industrial sectors
Figure 3 Breakdown of the appropriation of funds by German banks 012
Figure 4 Comparison of savings products 013
Figure 5 Greenhouse gas intensity in companies 014
Figure 6 Comparison of stock indices 016
Figure 7 Companies' shares in the total value of the largest
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sustainability and climate funds
Figure 8 Greenhouse gas intensity of average stock funds
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with variations
Figure 9 Comparison of pension funds 019
Figure 10 Financial assets of private households in 2008 020
Figure 11 Reduction in average financial investment portfolio 021
The capital of private investors worldwide finances
industrial and commercial activities which
contribute substantially to global greenhouse gas
emissions. The results of this study show how, for
example, the five largest stock funds in Germany
alone – representing managed assets of 20.7
billion euros – contribute to the financing of over
23 million tonnes of greenhouse gas emissions
a year. Extrapolated to the totality of all German
stock funds 1 , that means some 200 million tonnes
of greenhouse gases to which private investors
are substantially contributing, either directly or
indirectly through institutional investors. That
corresponds to 20 % of all Germany's greenhouse
gas emissions (UBA 2010).
Private households in Germany held financial
assets totalling 4.64 trillion euros in 2009
(Deutsche Bundesbank 2010). These enormous
investment sums can perform a key controlling
function in financing climate protection and
in the transition to a low-carbon economy. By
their choice of where to commit their money,
investors determine the capital investments of
tomorrow. The study shows how private investors,
by choosing climate-friendly and sustainable
financial investment products, can reduce their
personal carbon footprint and thus fulfill their
role as capital providers in a climate-conscious
manner.
Climate-friendly and sustainable capital investment
products have major potential for further
growth. Despite growing consumer awareness and
rising demand for climate-friendly products, the
market potential for financial investment products
giving due consideration to climate protection
issues remains largely untapped. Demand for
these products is restricted by inadequate
consumer education, a lack of market transparency
and a shortage of awareness among financial
advisors as to available forms of investment.
On the consumer goods market, the "product
carbon footprint" provides a guide for climateconscious
consumers to assess the impact of
consumed products on the climate. However, no
method has yet been established to indicate the
product carbon footprint of financial investments.
Investors in Germany are therefore unable to judge
the emissions generated by the capital they invest.
In view of that fact, this scoping study by adelphi,
in cooperation with INrate, represents an initial
attempt to determine the average carbon
footprint of the German investment portfolio.
With the greenhouse gas emissions of selected
capital investment products calculated by INrate,
adelphi reveals the emissions financed by private
investors' capital investments and indicates
the savings potential in German investment
portfolios. The study also demonstrates to private
investors and financial services providers how
the carbon footprint is applied with regard to
capital investments. This enables them to utilise
the opportunities offered by climate change, to
minimise its risks and at the same time to make a
key contribution to climate protection efforts.
1
German stock funds manage assets with a total value of 192,205 billion euros (BVI 2010).