Trucost, an environmental data provider, released a report late yesterday detailing the carbon footprints of top U.S. mutual funds with a combined value of $1,551,067 million. The Carbon Counts USA report examines 75 of the top equity funds and 16 socially responsible investment (SRI) funds.
The Carbon Counts USA report is the first to analyze carbon footprints of mutual fund holdings, and it’s of huge importance to fund managers and investors. If a mandatory carbon cap and trade system or carbon tax goes into effect, companies with a high carbon footprint will be penalized heavily for their emissions, in turn possibly affecting their stock returns. The report is also useful for anyone interested in environmentally-responsible investing.
The biggest loser on the Carbon Counts list is iShares FTSE, a fund responsible for 1,500 tons of CO2 for every $1 million it makes. In contrast, the ultra low carbon impact Financial Select Sector SPDR Fund is only responsible for 40 tons of CO2 for every $1 million–38 times less than iShares FTSE.
Despite stand-out performances from Financial Select, Vanguard Health Care Fund, PowerShares QQQ Trust, and Ariel Appreciation Fund, mutual funds have a long way to go in reducing their carbon footprint. The surveyed funds have combined global emissions of 615 million metric tons of greenhouse gases, or 8.6% of all U.S. emissions in 2007.