Carbon impact on global equity benchmark could be 0-14% of earnings: GIC

THE projected greenhouse gas emissions of a model global equity portfolio could have an impact between zero and 14 per cent of the portfolio’s net earnings in 10 years, according to an analysis by Singapore sovereign wealth fund GIC.

That finding was the result of a carbon pricing methodology that GIC developed to give itself a more robust, financially material and forward-looking way to assess the carbon risk of its investments.

Called carbon earnings-at-risk scenario analysis (Cesa), the methodology chiefly combines forecasts about an investment’s carbon intensity with models about carbon prices under different scenarios, regions and industries, according to a paper published on Tuesday (Oct 25). GIC head of sustainability and total portfolio sustainable investing Rachel Teo and her associates Wong De Rui and Lloyd Lee authored the paper.