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5 Key Takeaways for Developing Successful Carbon Strategy in the Financial Industry

Published: 11 Feb 2022
Last updated: 16 Jun 2022

Laptop showing view of the price change of a stock or a fund
What are the challenges and opportunities for executing a carbon strategy as an asset management company?

On January 25th, Abatable hosted a fireside chat discussing the main challenges and opportunities of executing a carbon offsetting strategy as an asset management company.

The Asset Management & Carbon Strategy event was hosted in conversation with AlbaCore Capital group. The Abatable Co-Founders Maria Eugenia Filmanovic and Valerio Magliulo were joined by Matthew Courey, Founding Partner and Chief Operating Officer of AlbaCore and Deborah Cohen Malka, Portfolio Manager and Partner at AlbaCore.

The panel touched on several key aspects of AlbaCore’s ESG and carbon offsetting strategy and discussed some of the climate risks and opportunities across its fund investments. The company was one of the first amongst its peers to invest in carbon offsetting on the corporate level back in 2018, and have continued to drive innovation at the fund level. Their firm has become a thought leader in offsetting strategy, pioneering new conceptual frameworks including carbon adjusted returns.

Key takeaways from the fireside chat

  • Carbon strategy starts with your team. Educate employees and nurture their expertise with casual drop in sessions, newsletters and “lunch and learns”. These can then formalize into internal carbon committees, within which the team may specialize into different verticals related to your carbon strategy.
  • Develop frameworks to measure and monitor the carbon intensity of your investments. Some firms do not (yet) report their emissions, so it’s important to identify useful benchmarks to generate reasonable estimates for the missing data points (e.g. peer analyses based on industry, sales and EV metrics). This will be a steep learning curve, but it remains pivotal to developing a successful carbon strategy.
  • Lead by example through offsetting of your firm’s operational footprint. Starting at home will allow you to experiment with your approach internally, giving you the opportunity to gain experience before approaching more complex issues within your portfolio.
  • The development of the offset market has many overlaps with elements of the financial industry; assurance, accounting frameworks, regulation, standardization, portfolio approach. These themes are familiar to those in finance, so there is a role for willing finance professionals to help develop this market.
  • The price of carbon is not zero, so asset managers need to start translating carbon emissions into basis points that help compare carbon adjusted returns. This process must be quantifiable, actionable and repeatable. Reporting in tandem with your asset manager, and offsetting with a specialist carbon offseting provider are key elements of this process.

The fireside chat closed with several questions from the audience touching on the measurement of the carbon footprint of companies that don’t yet disclose that data. They also addressed the methodology of selecting the specific projects for AlbaCore’s carbon offsetting portfolio.

Watch the full recording

Above is a summary of the 40-minute fireside chat. If you would like to watch the full recording, which includes many more details and insights, please submit your details in the form below.

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Feel free to get in touch with us if you have any questions about the carbon procurement market and are interested in offsetting activities.

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