Scientific Beta

IPE: "Investors wanting to allocate to EU climate benchmarks without encouraging greenwashing should ensure the underlying methodologies make as little use as possible of the carbon intensity measure mandated by the EU regulation, Scientific Beta has said."

IPE, 12/11/2020

"(...) Investors wanting to allocate to EU climate benchmarks without encouraging greenwashing should ensure the underlying methodologies make as little use as possible of the carbon intensity measure mandated by the EU regulation, Scientific Beta has said. The regulation on the EU climate benchmarks requires that the carbon intensity measure used in portfolio construction be based on enterprise value, including cash (EVIC). Another way of normalising emissions is by revenues, which is a feature of the weighted average carbon intensity metric recommended by the Task Force on Climate-related Financial Disclosures (TCFD). Scientific Beta said normalising emissions by revenue is an established market standard and that the EVIC variation “has not been properly justified or thought through”. (...)"