Schroders and GIC Conduct Research on Avoided Emissions Framework
Posted on 12/06/2021
Disclosed on November 30, 2021, fund management giant Schroders and Singapore’s GIC Private Limited published a joint research paper focused on the Avoided Emissions framework and how it can work with current carbon metrics in investment and the investment portfolio. The Avoided Emissions framework seeks to quantify the carbon emissions saved through the substitution of high carbon activities with low carbon alternatives. The current carbon footprint model focuses on greenhouse gas emissions. As various governments embrace ways to move away from fossil fuels, asset owners are looking to profit from these transitions. Yet nothing is guaranteed as politics change and the “planned” transition is estimated to take decades to achieve.
GIC is working on tools and models to integrate climate-related risks and opportunities into investment processes. The Asian sovereign wealth fund seeks to bet on companies that are likely to be winners in the ongoing carbon transition. GIC started looking at climate change as a portfolio risk back in 2009. GIC has an internal carbon emission dashboard for its portfolio companies. GIC also conducts stress tests on them at various carbon price scenarios.
GIC is embracing the Avoided Emissions framework as a way to find opportunities presented by the low carbon transition. GIC seeks to research these efforts in private markets and different industries.
The full report is available for download here (https://www.schroders.com/en/uk/tp/markets2/markets/a-framework-for-avoided-emissions-analysis/)