Are SRI funds financing carbon emissions? An input-output life cycle assessment of investment funds

• DOI: 10.1016/j.ecolecon.2023.107918
• Publication Date: 2023-06-16T21:16:42Z
• Authors: Ioana-Stefania Po...; Thomas Gibon; Claudia Hitaj; Mirco Rubin; Enrico Benetto
• Keywords: Scope (computer science); Equity; Investment; Flow of funds

Indirect greenhouse gas (GHG) emissions (scope 3) generally represent more than half of the total life cycle impact attributable to a company or an investment. However, widely used sustainability assessment tools for investment funds fail take these into account. Building on best practices from industrial ecology field, we develop input-output (IOLCA) methodology estimate GHG companies and funds. We apply our method sample 1340 sustainable (SRI) conventional equity domiciled in Europe their 11,275 unique holdings. extend application case study self-classified as Article 8 9 under recent European Sustainable Finance Disclosure Regulation (SFDR, 2019). Our model estimates 94% held – compared 17% coverage Carbon Project (CDP). When including scope 3, exposure both SRI is two three times larger when considering only direct impacts holdings' operations. Finally, 24% sampled Europe-domiciled are exposed carbon ETF tracking market index MSCI Europe.