Investing

Bank crisis weighs on U.S. climate disclosure decision, but top funds show the way

David Callaway

Published: March 22, 2023 4:07 am

Last Updated: March 22, 2023 10:08 am

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The furor over the global banking crisis sparked by Silicon Valley Bank won’t help ease the way for the Securities and Exchange Commission’s pending decision on corporate climate disclosure.

In particular, the debate over Scope 3 reporting — indirect emissions that make up the bulk of a company’s pollution — will become worse in the face of false accusations that climate investing caused the crisis. SEC Chairman Gary Gensler has promised a decision this spring, which started yesterday. It will be interesting if the SEC follows through given the banking crisis is still fresh.

But whatever the politics, the fact is some companies, and the funds that hold them, already adhere to reporting emissions from their vendors and suppliers, many of them tech companies. We asked Callaway Climate Insights friend Stefania di Bartolomeo and her team at Physis Investments in Boston to pull the top five funds focused on carbon emissions based on performance and emissions/enterprise value.

They found an eclectic list of tech funds and European focused funds. State Street’s Technology Select Sector SPDR ETF $XLK , with $40 billion in assets, was the largest. It’s up 70% over the past three years and largely made up of companies such as Apple $AAPL , Microsoft $MSFT , and Nvidia $NVDA , all of which use Scope 3 reporting.

BlackRock’s $BLK iShares Global 100 ETF (100), with $3 billion in assets, had similar holdings and is up more than 48% over the last three years. The other three, according to Physis, are the R Conviction France D fund (ROTESFR) in Paris, up 21%; the Win Fund Equity-Index Switzerland fund (WINFEIC), up 9.4%; and the CSIF Equity Switzerland Large Cap Blue fund (CSIFSMI), up 10.4%.

Unlike in politics, financial returns are tough to lie about. Whatever the controversy over the SEC’s decision, it’s clear that some companies and asset managers already see Scope 3 reporting as a credible tool to measure climate risk to avoid a performance crisis down the line. This reporting is getting more detailed, not less.

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