“Climate change brings new risks and opportunities to portfolios through the selection of investment products. The transition to a low-carbon economy punishes the business operations of some companies while making others more profitable,” says Elina Rinta, Portfolio Manager at OP Asset Management.
If the transition to a low-carbon economy fails or is delayed, the ensuing extreme climate change will bring negative consequences. Significant temperature rises will affect working conditions, the availability of raw materials will suffer, and extreme weather conditions will result in damage to physical property. In addition to individual businesses, climate change over the long term can impact entire national economies.
The aim of OP Asset Management is to ensure that its investment portfolios enjoy good long-term value performance relative to risk. From the perspective of performance over the long term, our portfolio managers believe a controlled and early transition to a low-carbon economy to be the best solution.
Good results for OP’s funds
In a recently published report, the carbon intensity of surveyed OP funds had decreased by an average of 6 per cent in two years, while the median intensity was down 14 per cent. Compared with the benchmark portfolio, the profitability of investments by OP Asset Management will decrease at a lower rate if the price of emission allowances rises to the level required by the Paris Agreement by 2030.
OP Fund Management publishes carbon footprint calculations for the majority of its managed equity and bond funds twice a year. Fund-specific corporate responsibility analyses are also published for the majority of our equity and bond funds as part of monthly reviews. The reports disclose not only the overall corporate responsibility score for the whole portfolio but also the percentage of the portfolio companies’ net sales attributable to renewable energy, energy efficiency and green construction.
OP Asset Management joined as a public supporter of the international Task Force on Climate-related Financial Disclosures (TCFD) in 2019. The reviews improve the climate transparency of OP Asset Management.