Scientific Beta

ESG Clarity: "But Frédéric Ducoulombier, ESG director at index provider Scientific Beta, commented that its concerns have, in large part, not been addressed. He said that a capitalisation-weighted index relative to decarbonisation and rough sector control unnecessarily reduces the scope of the regulation and would fail to protect against greenwashing."

ESG Clarity 23/07/2020

"(...) The European Commission has adopted technical regulations for climate benchmarks, which will help investors align their investments with the Paris climate goals. (...) But Frédéric Ducoulombier, ESG director at index provider Scientific Beta, commented that its concerns have, in large part, not been addressed. He said that a capitalisation-weighted index relative to decarbonisation and rough sector control unnecessarily reduces the scope of the regulation and would fail to protect against greenwashing. “By classifying securities in a binary manner into high or low climate impact, instead of adopting a fine-grain analysis of the sectoral dimensions, the regulator incentivises portfolio decarbonisation strategies based on reallocation across sectors without any regard for the needs of the real economy,” he explained. Ducoulombier also stated that the used carbon exposure measure, enterprise value, would deviate from existing standards and may not incentivise corporate efforts to decarbonise. (...)"