The new rating, which has been developed by CDP, a not-for-profit provider of corporate environmental data, and ISS-Ethix Climate Solutions, reflects the carbon intensity and carbon footprint of a fund’s portfolio. The initiative has been funded by Climate-KIC, the European Union’s main climate innovation initiative.
It differs from other ESG ratings such as those provided by Morningstar, in the sense that it focuses solely on the climate impact of funds. It doesn’t take into account other environmental, let alone social and governance criteria.
Climetrics has rated 2500 Ucits funds, accounting for about 55% of assets invested in equity funds currently for sale in Europe. A fund’s climate portfolio score accounts for 85% of the rating, with the extent to which an asset manager takes action on integrating climate change into their governance and investment processes accounting for the remainder.
Mirroring the fund rating approach used by Morningstar, Climetrics scores funds using a 1-5 green leaf rating score. Only the ratings of the top-rated funds that score 4 or 5 leaves are currently publicly available on the Climetrics website, with the remaining fund ratings available on a subscription basis.
