Climate Change Research, Policy and Analysis In Investment Selection
Calvert's Approach
In order to evaluate companies in this area of growing concern, Calvert regularly consults outside experts, including representatives from NGOs, government, and corporations, to inform our climate change priorities. Calvert examines companies' greenhouse gas (GHG) emissions and energy efficiency, as well as how the companies manage climate change exposure in order to avoid risks and embrace the opportunities posed by climate change.
1. Performance: We track corporate GHG emissions and efforts to mitigate or eliminate them. Calvert also goes beyond direct emissions and analyzes product-related emissions (such as automobile fleet fuel efficiency). We track goals and targets, and advocate for GHG emissions reductions in response to the need for global emissions reductions of 80 percent by 2050 as recommended by the Intergovernmental Panel on Climate Change (IPCC). We also track energy use reduction as well as the support of renewable energy and/or clean technologies.
Capitalizing on Performance Opportunities: Lowering Emissions
Johnson & Johnson takes GHG reduction so seriously that it met its reduction goal five years ahead of schedule. While growing its business, the company successfully lowered overall emissions by nearly 12 percent from 1990 levels. Johnson & Johnson owes its accomplishment to a combination of clean energy commitments and energy efficiency improvements, which in turn resulted in significant cost savings. Johnson & Johnson’s leadership in emissions reduction performance is a clear testament to its ability to strategically manage the risks related to climate change.
As of August 31, 2009, Calvert’s sustainable and responsible funds owned the following companies: Johnson & Johnson represented 1.94% of Calvert Large Cap Value Fund, 0.81% of CSIF Balanced Portfolio, 3.15% of CSIF Enhanced Equity Portfolio, 2.84% of Calvert Social Index Fund, 2.85% of Calvert Large Cap Growth Fund. For the most recently available information on holdings in each Calvert sustainable and responsible equity fund, click here. Current and future portfolio holdings are subject to market risk.
2. Life Cycle: The impacts of climate change also extend beyond the product’s use of fossil fuels. We evaluate whether companies have a supply chain that may be highly affected by the physical risks of climate change or whether a financial or insurance company is highly exposed to carbon-intensive investments.
Capitalizing on Life Cycle Opportunities: Understanding the Entire Carbon Chain
3M adopts a whole life cycle approach to climate change, assessing the implications of CO2 from materials acquired to products sold. As part of 3M’s Life Cycle Management assessment process, the company incorporates an analysis of energy and resulting greenhouse gas generation and emissions in new product manufacturing, use and disposal.
As of August 31, 2009, Calvert’s sustainable and responsible funds owned the following companies: 3M represented 1.78% of Calvert Large Cap Value Fund, 0.84% of CSIF Balanced Portfolio, 1.56% of CSIF Enhanced Equity Portfolio, and 0.78% of Calvert Social Index Fund. For the most recently available information on holdings in each Calvert sustainable and responsible equity fund, click here. Current and future portfolio holdings are subject to market risk.
3. Transparency and Strategic Opportunities : Also important is our examination of a company’s response to climate change. We believe that transparency is the baseline for action, and we urge all companies to track and report emissions or implement measures to mitigate their carbon footprint as well as report how the company is responding to the impacts of climate change. We also look for a company’s provision of climate-friendly products and services or willingness to seek opportunities in an increasingly carbon-constrained world.
Capitalizing on Strategic Opportunities: "Smart" Products That Embrace Climate Change
A promising area of opportunity and growth for a number of companies is in providing smarter, more efficient solutions related to energy and natural resources. The technology sector is one of the best sectors positioned to provide information and communication technologies given its history in making products faster, smaller, and more efficient. These companies are positioned well in a carbon constrained economy by doing more with less.
- Dell offers Energy Smart Data Center Assessment and Design services to optimize customers’ data center facilities for power consumption, performance, reliability, and availability. Dell also performs assessments to reduce energy use in customer HVAC and power delivery systems. At the same time, Dell has assessed supply chain GHG emissions, engaged with suppliers on controlling emissions, addressed climate impacts of materials/packaging, and improved logistics to reduce emissions. Dell is also working through the Electronic Industry Citizenship Coalition (EICC) to develop a common approach for the electronics industry to measure emissions in the supply chain.
- IBM offers several products specific to energy management and technology. Beyond virtualization services, IBM’s Active Energy Manager is a hardware/software tool that enables customers to meter and control power usage on an individual server, while another management software product allows for energy management across a data center. As impressive is the company’s achievement as one of the few U.S. companies that have managed to meet their emissions reduction target of reducing 1990 emissions by 40% by 2005.
As of August 31, 2009, Calvert’s sustainable and responsible funds owned the following companies: Dell represented 0.46% of Calvert Social Index Fund; IBM represented 1.52% of Calvert Large Cap Value Fund, 1.48% of CSIF Balanced Portfolio, 2.45% of CSIF Enhanced Equity Portfolio, 2.65% of Calvert Social Index Fund, 3.15% of Calvert Large Cap Growth Fund, 0.42% of Calvert World Values International Equity Fund, and 0.58% of CSIF Equity Portfolio. For the most recently available information on holdings in each Calvert sustainable and responsible equity fund, click here. Current and future portfolio holdings are subject to market risk.
4. Climate Public Policy: Finally, a company’s policy view and public action on climate change is a telling indicator of a company’s ability to respond to the uncertainties and risks of climate change. We evaluate whether a company is playing a constructive role in climate change public policy, accepting above all the need for binding emissions reductions targets.
Companies flex their muscle on climate change policy: Business for Innovative Climate & Energy Policy (BICEP)
On November 19, 2008, a new business coalition, Business for Innovative Climate & Energy Policy (BICEP), was launched calling for strong US climate and energy legislation to spur the clean energy economy and reduce GHG emissions. Companies such as Nike, Timberland, and Starbucks, each held in Calvert SRI funds, were founding members in this important coalition that works directly with key allies in the business community and with members of Congress to pass meaningful energy and climate change legislation.
As of August 31, 2009, Calvert’s sustainable and responsible funds owned the following companies: Nike represented 1.29% of CSIF Balanced Portfolio, 2.45% of CSIF Enhanced Equity Portfolio, 0.25% of Calvert Social Index Fund, 1.06% of Calvert Large Cap Growth Fund; Timberland represented 0.07% of CSIF Enhanced Equity Portfolio; and Starbucks represented 0.24% of Calvert Social Index Fund, 1.10% of Calvert Large Cap Growth Fund, and 2.68% of Calvert Mid Cap Value Fund.
For the most recently available information on holdings in each Calvert sustainable and responsible equity fund, click here.
Current and future portfolio holdings are subject to market risk.
#9368 (9/09)
