Investment Strategies for Reducing Carbon Exposure

Transcription

1 Investment Strategies for Reducing Carbon Exposure Chris Gauthier, CFA Stonehearth Capital Management Chief Investment Officer 2018

2 WHY DIVEST OR REDUCE FOSSIL FUELS IN YOUR PORTFOLIO? Align your investments with your values Reduce financial risk of fossil fuels Do your little bit of good where you are; it s those little bits of good put together that overwhelm the world - Archbishop of South Africa Desmond Tutu

3 ALIGN YOUR INVESTMENTS WITH YOUR VALUES Climate change poses human, environmental and economic threats. The threat is not in the future. Climate change is happening now. You and your family can express your concern about fossil fuel industry s role in climate change. You can take concrete action that is part of a larger movement

4 REDUCE FINANCIAL RISK OF FOSSIL FUELS Fossil fuel companies are valued partially based on the reserves they hold being brought to market in the future. The assumption is that all assets will be extracted, sold, and burned. Fossil fuel industry has five times more CO2 in coal, oil, and gas reserves than can be safely burned to not exceed scientifically accepted levels.* If carbon emissions are taxed or capped, reserves may no longer be assets for the company. Investors could be left holding these devalued assets. * Scroll down and click What does Do The Math Mean?

5 HOW DO INVESTORS DIVEST OR REDUCE THEIR Positive Screening, 4% Engagement, 4% FOSSIL FUEL EXPOSURE? Positive + Negative Screening, 3% Portfolio Footprinting & Analysis, 15% Negative Screening, 61% Low Carbon Index, 13% Source: MSCI ESG Research

6 WHAT IS CARBON FOOTPRINTING? The carbon footprint of a fund is calculated by tracking and measuring the greenhouse gas emission of all underlying companies in a portfolio Carbon Emissions data is provided by yoursri & South Pole Group Expressed as amount of carbon dioxide equivalents in tonnes and is written as Source: Fossilfreefunds.org/carbon-footprint tco2e

7 WHY CARBON FOOTPRINTING? Allows for portfolio comparison Quantifiable & Measurable Ability to control for concentration risk

8 SCM S CARBON LIGHT PORTFOLIO Reduce carbon footprint of assets Maintain similar risk profile to our standard risk models Similar expense ratios as our standard risk models Maintain the Ability to Meet Clients Financial Goals

9 SCM S CARBON LIGHT CONSERVATIVE PORTFOLIO CONSERVATIVE CARBON LIGHT CONSERVATIVE DIFFERENCE Fixed Income 55% 55% 0.00% US Equity 17% 17% 0.00% International Equity 8% 8% 0.00% Alternative 19% 19% 0.00% Rixtrema Score Expense Ratio 0.46% 0.54% 0.08% Carbon Footprint %

10 SCM S CARBON LIGHT MODERATE PORTFOLIO MODERATE CARBON LIGHT MODERATE DIFFERENCE Fixed Income 22% 22% 0.00% US Equity 34% 34% 0.00% International Equity 28% 28% 0.00% Alternative 15% 15% 0.00% Rixtrema Score Expense Ratio 0.45% 0.55% 0.10% Carbon Footprint %

11 SCM S CARBON LIGHT AGGRESSIVE PORTFOLIO AGGRESSIVE CARBON LIGHT AGGRESSIVE DIFFERENCE Fixed Income 0% 0% 0.00% US Equity 47% 47% 0.00% International Equity 37% 37% 0.00% Alternative 15% 15% 0.00% Rixtrema Score Expense Ratio 0.42% 0.55% 0.13% Carbon Footprint %

12 Questions & Answers Required Disclosure This communication is not an offer to sell, or solicitation of offers to buy, securities. Investments entail significant risks and are suitable only for certain investors as part of an overall diversified investment strategy. Past performance is not an indication of future results. All statements made herein speak only as of the date they were originally made. Information included herein does not constitute investment advice and should not be viewed as current or past recommendation to buy or sell any securities or adopt any investment strategy. Please do not send trade or check requests through . Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.