Dr. David Allen
Investors are starting to recognise that the carbon footprints of their portfolios often dwarf the carbon footprint of their day to day lives. The carbon footprint of a portfolio is driven by the companies that the portfolio is invested in, for example, the emissions of Qantas, BHP, or Bega Cheese (those pesky cows!).
Let’s do the maths. To keep things simple, let’s assume that an investor holds a single asset, an ASX 300 index fund. The ASX 300 has a carbon footprint of 95 tonnes of CO2 per million dollars invested.
It can be hard to get our heads around what this actually means, so in the chart below, we translate it into everyday terms:
A footprint of 95 tonnes is equivalent to the carbon footprint of 6 Australians, 428 one way flights from Sydney to Melbourne, 3812 steaks, and requires 4332 trees to sequester from the atmosphere.
When thinking about different ways of expressing the carbon footprint of our portfolios I came across a journal article showing that getting divorced is one of the most carbon intensive things we can do because it requires a new home, car, and so on. Unfortunately my wife saw me googling “Divorce and new home” and I has a little bit of explaining to do…
No wonder investors are really starting to take note of the carbon emitted by their investments.
About the Author
Dr David Allen is head of Short/Long Strategies at Plato, managing the Plato Global Net Zero Hedge Fund. He holds a PhD from Cambridge and Bachelor of Business with First Class Honours.
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