Investment Strategies for Reducing Carbon Exposure
Investment Strategies for Reducing Carbon Exposure Chris Gauthier, CFA Stonehearth Capital Management Chief Investment Officer 2017
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
WHY DIVEST OR REDUCE FOSSIL FUELS IN YOUR PORTFOLIO? • Align your investments with your values • Reduce financial risk of fossil fuels “ Do your little bit of good where you are; it’s those little bits of good put together that overwhelm the world”
- Archbishop of South Africa Desmond Tutu
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
ALIGN YOUR INVESTMENTS WITH YOUR VALUES • Climate change poses human, environmental and economic threats. • The threat is not in the future. Climate change is happening now. • You and your family can express your concern about the fossil fuel industry’s role in climate change. • You can take concrete action that is part of a larger movement Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
REDUCE FINANCIAL RISK OF FOSSIL FUELS • Fossil fuel companies are valued partially based on the reserves they hold being brought to market in the future. The assumption is that all assets will be extracted, sold, and burned. • Fossil fuel industry has five times more CO2 in coal, oil, and gas reserves than can be safely burned to not exceed scientifically accepted levels.*
• If carbon emissions are taxed or capped, reserves may no longer be assets for the company. • Investors could be left holding these devalued assets. *http://gofossilfree.org/faq/. Scroll down and click “What does ‘Do The Math’ Mean?”
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
HOW DO INVESTORS DIVEST OR REDUCE THEIR FOSSIL FUEL EXPOSURE? Positive + Negative Screening, 3%
Positive Screening, 4% Engagement, 4%
Portfolio Footprinting & Analysis, 15% Negative Screening, 61%
Low Carbon Index, 13%
Source: MSCI ESG Research Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
WHAT IS CARBON FOOTPRINTING ? • The carbon footprint of a fund is calculated by tracking and measuring the greenhouse gas emission of all underlying companies in a portfolio • Carbon Emissions data is provided by yourSRI & South Pole Group
• Expressed as amount of carbon dioxide equivalents in tonnes and is written as
tCO2e Source: Fossilfreefunds.org/carbon-footprint Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
WHY CARBON FOOTPRINTING? • Allows for portfolio comparison • Quantifiable & Measurable • Ability to control for concentration risk
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
SCM’S CarbonLITE DIVERSIFIED PORTFOLIOS • Reduce carbon footprint of assets
• Maintain similar risk profile to our standard risk models • Similar expense ratios as our standard risk models • Maintain the Ability to Meet Clients’ Financial Goals Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
SCM’S CarbonLITE CONSERVATIVE PORTFOLIO CONSERVATIVE
CarbonLITE CONSERVATIVE
DIFFERENCE
Fixed Income
55%
55%
0.00%
US Equity
17%
17%
0.00%
International Equity
8%
8%
0.00%
Alternative
19%
19%
0.00%
Rixtrema Score
38
38
0
Expense Ratio
0.45%
0.54%
0.09%
Carbon Footprint
36
21
-41.67%
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
SCM’S CarbonLITE MODERATE PORTFOLIO MODERATE
CarbonLITE MODERATE
DIFFERENCE
Fixed Income
22%
22%
0.00%
US Equity
34%
34%
0.00%
International Equity
28%
28%
0.00%
Alternative
15%
15%
0.00%
Rixtrema Score
55
51
-4
Expense Ratio
0.41%
0.58%
0.17%
Carbon Footprint
106
70
-34.30%
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
SCM’S CarbonLITE AGGRESSIVE PORTFOLIO AGGRESSIVE
CarbonLITE AGGRESSIVE
DIFFERENCE
Fixed Income
0%
0%
0.00%
US Equity
47%
47%
0.00%
International Equity
37%
37%
0.00%
Alternative
15%
15%
0.00%
Rixtrema Score
63
57
-6
Expense Ratio
0.37%
0.59%
0.22%
Carbon Footprint
151
86
-42.90%
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
Questions & Answers
Required Disclosure This communication is not an offer to sell, or solicitation of offers to buy, securities. Investments entail significant risks and are suitable only for certain investors as part of an overall diversified investment strategy. Past performance is not an indication of future results. All statements made herein speak only as of the date they were originally made. Information included herein does not constitute investment advice and should not be viewed as current or past recommendation to buy or sell any securities or adopt any investment strategy. Please do not send trade or check requests through email. Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
WHY DIVEST OR REDUCE FOSSIL FUELS IN YOUR PORTFOLIO? • Align your investments with your values • Reduce financial risk of fossil fuels “ Do your little bit of good where you are; it’s those little bits of good put together that overwhelm the world”
- Archbishop of South Africa Desmond Tutu
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
ALIGN YOUR INVESTMENTS WITH YOUR VALUES • Climate change poses human, environmental and economic threats. • The threat is not in the future. Climate change is happening now. • You and your family can express your concern about the fossil fuel industry’s role in climate change. • You can take concrete action that is part of a larger movement Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
REDUCE FINANCIAL RISK OF FOSSIL FUELS • Fossil fuel companies are valued partially based on the reserves they hold being brought to market in the future. The assumption is that all assets will be extracted, sold, and burned. • Fossil fuel industry has five times more CO2 in coal, oil, and gas reserves than can be safely burned to not exceed scientifically accepted levels.*
• If carbon emissions are taxed or capped, reserves may no longer be assets for the company. • Investors could be left holding these devalued assets. *http://gofossilfree.org/faq/. Scroll down and click “What does ‘Do The Math’ Mean?”
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
HOW DO INVESTORS DIVEST OR REDUCE THEIR FOSSIL FUEL EXPOSURE? Positive + Negative Screening, 3%
Positive Screening, 4% Engagement, 4%
Portfolio Footprinting & Analysis, 15% Negative Screening, 61%
Low Carbon Index, 13%
Source: MSCI ESG Research Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
WHAT IS CARBON FOOTPRINTING ? • The carbon footprint of a fund is calculated by tracking and measuring the greenhouse gas emission of all underlying companies in a portfolio • Carbon Emissions data is provided by yourSRI & South Pole Group
• Expressed as amount of carbon dioxide equivalents in tonnes and is written as
tCO2e Source: Fossilfreefunds.org/carbon-footprint Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
WHY CARBON FOOTPRINTING? • Allows for portfolio comparison • Quantifiable & Measurable • Ability to control for concentration risk
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
SCM’S CarbonLITE DIVERSIFIED PORTFOLIOS • Reduce carbon footprint of assets
• Maintain similar risk profile to our standard risk models • Similar expense ratios as our standard risk models • Maintain the Ability to Meet Clients’ Financial Goals Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
SCM’S CarbonLITE CONSERVATIVE PORTFOLIO CONSERVATIVE
CarbonLITE CONSERVATIVE
DIFFERENCE
Fixed Income
55%
55%
0.00%
US Equity
17%
17%
0.00%
International Equity
8%
8%
0.00%
Alternative
19%
19%
0.00%
Rixtrema Score
38
38
0
Expense Ratio
0.45%
0.54%
0.09%
Carbon Footprint
36
21
-41.67%
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
SCM’S CarbonLITE MODERATE PORTFOLIO MODERATE
CarbonLITE MODERATE
DIFFERENCE
Fixed Income
22%
22%
0.00%
US Equity
34%
34%
0.00%
International Equity
28%
28%
0.00%
Alternative
15%
15%
0.00%
Rixtrema Score
55
51
-4
Expense Ratio
0.41%
0.58%
0.17%
Carbon Footprint
106
70
-34.30%
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
SCM’S CarbonLITE AGGRESSIVE PORTFOLIO AGGRESSIVE
CarbonLITE AGGRESSIVE
DIFFERENCE
Fixed Income
0%
0%
0.00%
US Equity
47%
47%
0.00%
International Equity
37%
37%
0.00%
Alternative
15%
15%
0.00%
Rixtrema Score
63
57
-6
Expense Ratio
0.37%
0.59%
0.22%
Carbon Footprint
151
86
-42.90%
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
Questions & Answers
Required Disclosure This communication is not an offer to sell, or solicitation of offers to buy, securities. Investments entail significant risks and are suitable only for certain investors as part of an overall diversified investment strategy. Past performance is not an indication of future results. All statements made herein speak only as of the date they were originally made. Information included herein does not constitute investment advice and should not be viewed as current or past recommendation to buy or sell any securities or adopt any investment strategy. Please do not send trade or check requests through email. Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
Stonehearth Capital Management, LLC is a Registered Investment Advisor. Registration does not imply a certain level of skill or training.
