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Green fund ratings based on corporate climate targets

Climetrics, the world’s first and only independent body that provides climate rating for investment funds, has announced its advanced methodology for scoring funds that invest in companies with emissions reduction targets based on climate science. Climetrics is jointly backed by the non-profit global climate organisation CDP and ISS-Ethix Climate Solutions.

Transparency on climate impact

Actively-managed and exchange-traded funds that invest in companies with public commitments to science-based targets are assessed by Climetrics and attributed a one-to-five leaf rating. This green rating system gives investors “wide-ranging transparency on the climate impact of funds and a simple view of a fund’s exposure to climate risks”, according to the company. Top-rated funds can be found for free on climetrics-rating.org.

The rating is based on a fund's portfolio holdings, its investment policy and asset manager governance. Climetrics states that climate performance of a fund’s portfolio is a key part of its overall Climetrics rating. Investee companies are scored on their current carbon emissions, exposure to fossil fuels and use of clean technology, and their future strategies for managing long-term climate and deforestation risks.

More clarity and confidence

Nico Fettes, head of Climetrics at CDP, said: “This is a breakthrough for the momentum of science-based target-setting and a big step for fund investors to have more clarity and confidence in the long-term impact of their investments. Investors now have the tool to choose from a wide range of funds, with different investment approaches, which are better-aligned with the low-carbon transition and present lower long-term risks to their returns.”


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