An analysis of data underlying Climetrics, the world’s first climate impact rating for funds developed jointly by CDP and ISS-Ethix Climate Solutions, finds just over 60% of funds and ETFs offered by asset management firms based in Sweden receive either a 4 or a 5 leaf rating, representing the two top marks under the Climetrics rating scale. A significant gap is seen between Sweden, with 60%, and the next best market, with just 39% of all German funds receiving either a 4 or 5-leaf rating. Switzerland follows closely at 38%, with France at 37%, the Netherlands at 33%, and the U.K. at 22%.
Launched on July 6, 2017, Climetrics measures climate impact more comprehensively than any fund rating to date, capturing three aspects of analysis to assess a fund along its entire investment process, including the climate impact of its portfolio holdings; the extent to which the asset manager integrates climate change into its governance and investment processes; and whether the fund has a specific ESG investment policy. The Climetrics fund universe covers approximately 2800 of some of the largest actively managed equity funds and ETFs available for sale in Europe, with ratings for the best-rated funds publicly available on climetrics-rating.org.
The analysis examined the prevalence of asset managers’ well-rated funds on an intra-market basis across the following six European countries in which Climetrics covers a minimum of 75 funds based in each country: France, Germany, the Netherlands, Sweden, Switzerland, and the U.K.
A significant gap is seen between Sweden, with 60%, and the next best market, with just 39% of all German funds receiving either a 4 or 5-leaf rating. Switzerland follows closely at 38%, with France at 37%, the Netherlands at 33%, and the U.K. at 22%. The analysis also reveals that Sweden has the highest percentage of Climetrics-rated funds with an explicit ESG mandate, at 48%, followed by the Netherlands and France at 44% and 21 % respectively.
|Country||% out of the total Climetrics fund universe, of 4 and 5 leaf rated funds within the market|
Nico Fettes, Project Lead at CDP, added: “Climate change is an increasingly urgent priority for investors, and this data shows Swedish asset managers leading the pack in meeting this demand relative to their peers in certain top-performing European markets. With Climetrics bringing greater transparency to the market, investors can “vote” with their money and shift their capital to low-carbon assets”.“Swedish institutions have long been at the forefront of those in Europe’s financial community as being conscious of both the materials risks and opportunities presented by climate change,” said Maximilian Horster, Head of ISS-Ethix Climate Solutions. “As the analysis suggests, this is now deeply embedded in investment portfolio construction with the proportion of Swedish institutions receiving top scores far outpacing those in the other European markets reviewed.”
At the institutional level, the top 10 asset managers with the highest proportion of 4 and 5 leaf rated funds across all six markets were identified. The asset managers are listed in alphabetical order in the table below.
This year’s inaugural analysis will provide a baseline from which ISS-Ethix Climate Solutions will annually chart an overview of the European fund market based on climate impact ratings from Climetrics.
The methodology underlying the ratings was developed by the rating’s data providers, ISS-Ethix Climate Solutions and CDP, in consultation with NGOs, asset owners and managers, and members of the academic community. Also including a number of external data sources, it scores funds across three levels to produce its 1-5 green leaf rating, with five leaves
indicating outstanding climate performance relative to thousands of other funds available in the market. Most importance is placed on each fund’s Portfolio Holdings Score, measuring the climate impact of all individual companies in which the fund is invested. An Asset Manager Score identifies asset manager action on integrating climate change into their governance and investment processes, while an Investment Policy Score identifies funds with a specific ESG mandate. The universe of funds is provided by yourSRI.com, the service provider for all of Climetrics’ fund-related information. Climetrics was catalysed and funded by Climate-KIC, the European Union’s main climate innovation initiative. More on the methodology, including the rating scale, is available here.
 The Climetrics fund universe consists of approximately 2,800 of some of the largest actively managed equity funds and ETFs available for sale in Europe, with portfolio holdings reported via Thomson Reuters Lipper and representing about €2 trillion in fund investments. The fund universe also covers ESG funds with an ethical flag reported via Thomson Reuters Lipper.