August 10, 2021
The role of the carbon footprint in sustainability assessment
Countries around the world have set themselves a common goal: By ratifying the Paris Climate Agreement in June 2017, Switzerland also committed to halving its CO2 emissions by 2030 compared to 1990 levels. However, issues such as biodiversity, toxic pollution, radioactive waste, social injustice and economic inequality are not included in carbon accounting.
This rather one-sided focus on one key figure can certainly be viewed critically - especially when it comes to the topic of sustainability as a whole. Nevertheless, thecarbon footprint plays an important role in the evaluation of sustainable investments. This is because it is an important starting point for initiating and effectively implementing changes towards greater sustainability.
When is a company sustainable?
The absolutecarbon footprint and the reduction pathway (strategy and measures to reduceCO2 emissions) are just two of many tools used to assess a company's contribution to a sustainable future. This can be illustrated using the example of two utility companies from the Forma Futura investment universe. If you only look at the emissions, the picture for both is initially poor. A sample portfolio consisting of just these two companies has already exceeded theCO2 budget many times over by 2020. A temperature rise of 6°C is forecast by 2050. Compared with the MSCI World equity index, the emissions intensity of the sample portfolio is many times higher, even though the MSCI World includes various operators of coal-fired power plants.
So what do these two companies have to do with the Forma Futura universe? Company A generates four-fifths of its turnover in the areas of water and waste management. Its commitment to the circular economy stands out in particular. According to its own figures, it generates almost a fifth of its turnover in this area. Company B, on the other hand, is active in the areas of energy and infrastructure. Energy and electricity are generated exclusively from renewable sources, mainly from wind power. In the area of infrastructure, the focus is on water cycles, mobility, waste management and efficient buildings.
Both companies therefore make an important contribution to a sustainable, future-proof society. The two examples show that focusing solely on emissions obscures important aspects of sustainability.
The comprehensive view is crucial
Forma Futura's sustainability research identifies those companies that promote a sustainable quality of life. Their products and services also make an effective contribution to achieving the 17 Sustainable Development Goals (SDGs).
The key questions here are:
- How sensible and useful are the products for a sustainable world?
- Are declarations of intent just theory or are they actually implemented?
What can we learn from each other and how can we raise awareness both internally and externally? - How do we raise awareness of sustainability issues?
- How do we continue to educate ourselves and remain open to new insights?
Forma Futura pursues an integrated approach that takes equal account of environmental and social criteria and includesCO2 emissions as part of the overall environmental assessment. Products and services must be checked for their meaningfulness. In this way, the basic prerequisites for the responsible use of money as a resource can be created.
The entire analysis is carried out on the basis of a comprehensive catalog of criteria. Enough leeway is always left so that the peculiarities of a company, which static criteria would neglect, can be recorded. Forma Futura's broad-based team works together with external data collection specialists, thus guaranteeing a competent and comprehensive perspective.
