The board of the Swedish Investment Fund Association (Fondbolagens förening) has adopted a pathway for reporting carbon emissions from fund investments.
The pathway adheres to recommendations issued by the Task Force for Climate-related Financial Disclosures (TCFD), and also makes possible reporting carbon footprints for fixed interest and balanced funds.
In 2016, the Association adopted a pathway for calculating emissions of greenhouse gases from holdings in securities funds. Since then there have been a number of changes, which the new pathway takes heed of, such as the EU's Non-Financial Reporting Directive, new investor led climate initiatives, the EU's plans for sustainable finance. Meanwhile, the TCFD framework has, in a short space of time, become that which most climate initiatives, reporting frameworks and the European Commission have adopted, the Association notes.
At a practical level, the changes mean that the calculation equation put forward in the pathway is adjusted to show the fund portfolio's exposure to carbon intensive businesses, instead of the fund's ownership portion in companies exhibiting high carbon intensity. Previously, the calculations were used just for equity funds, but it will now become possible to calculate and report on carbon footprints for fixed interset and balanced funds as well.
Fredrik Nordström, chief executive at the Associatoin, said: "We see sustinability questions becoming increasingly important for investors. There is a lot of work ongoing in the fund industry to develop sustainable products and meet demand. It is also important that funds can inform as much as possible around the sustainability work. The industry is seeking increased transparency and the ability to make comparisons, and we have now taken an additional step in the development of our pathway where we, among other things, adjust to the TCDF framework. It is very positive that more companies are reporting climate data, but I want to flag up that there are still limits to data access, which complicates the calculations of funds and the interpretation of key figures. The objecttive is that in time we will get an even better picture of companies' climate footprints, and not least forward looking information on how different companies are plannign to meet the climate challenges."