Monday, September 10, 2007

Socially Responsible Investing-"Everyone’s a winner in the land of SRI"

From the Financial Times FT Alphaville blog:

Hot on the heels of the ludicrous sounding China Methane Recovery Fund, backed by Man Group, the SRI bandwagon keeps on truckin’.

Merrill Lynch notes that, “headlines on climate change issues have swamped the public through 2007,” before going on to do some swamping of their own with their 58-page report on ‘Carbon Leaders.’

The kool-aid is now so potent that investors have been persuaded to part with $382m of their cash to place in the Man Investments fund which will set up subsidiaries to extract methane from Chinese coal mines, use it generate electricity, and earn itself carbon credits for trading as a result of dealing with all that nasty noxious gas.

In this nirvana, you can generate a good return but, “equally important”, you can help the environment, save the planet, and boost China’s economic growth, and therefore the world’s.

But putting our sceptical selves to one side, the Merrill report argues that with climate change sat squarely on EU policymakers’ agendas and Europe currently set to fall short of its Kyoto targets, a squeeze on emissions is set to affect all companies and sectors, not just those big, bad heavy emitters.

By looking not at direct emissions as part of day-to-day operations, but at the carbon footprint of companies - or how much carbon they generate including in their supply chain for each $1m of revenue - Merrill attempts to drill down to a maximum financial liability for companies in the DJ Stoxx 600, using data from Trucost....MORE