Montreal-based Fonds de solidarité FTQ is stepping up its efforts to curb the carbon footprint of its investment portfolio by using a new environmental index screen in one of its portfolios, the investment fund announced Thursday.
The Fonds be the first investor to integrate the MSCI world low carbon ESG target screened index into the management of a $1.3 billion portfolio, by the end of its financial year on May 31, 2019, the fund says in a news release.
The organization, which has $14.3 billion in net assets, says that the move stems from its pledge to reduce the carbon footprint of its public company investments by 25% by 2025.
“This new index will be an important part of our efforts to reduce the Fonds’ carbon footprint, while doing our part to ensure that the energy transition is just and equitable for all workers and communities,” says Mario Tremblay, vice-president public and corporate affairs, in a statement.
The index includes large and mid-cap stocks in 23 developed markets. Along with carbon emission considerations, it excludes tobacco, controversial weapons, and thermal coal stocks; overlaid with an environmental, social and governance (ESG) rating improvement.
“The objective of the index is to reduce carbon exposure by at least 70% versus the standard MSCI world index,” says Jana Haines, head of equity index products for the Americas at MSCI. “The index can act as a benchmark for institutional investors who wish to manage potential risks associated with the transition to a low carbon economy,” in a statement.
“The new MSCI world low carbon ESG target screened index shows that innovation can be part of the financial services industry’s efforts to combat climate change,” Tremblay adds.