The fund’s carbon footprint
One of the tools we use to inform our approach to carbon-intensive businesses, including fossil fuel companies, is monitoring the carbon footprint of the fund.
We calculate the weighted average carbon intensity of the fund on an ongoing basis. This metric, recommended by the Task Force on Climate-related Financial Disclosures, measures a portfolio’s exposure to carbon-intensive companies.
It allows for decomposition and attribution analysis, meaning that we can identify the largest company contributors to this metric. We use this to inform our management of the fund and our subsequent engagements with companies.
WEIGHTED AVERAGE CARBON INTENSITY %
Source: MSCI ESG research, Ruffer calculations, data as at 31 December 2023
ESG RATING OF HOLDINGS WITHIN THE CHARITY ASSETS TRUST
Source: MSCI ESG Research as at 31 December 2023. Totals may not equal 100 due to rounding
ESG ratings
The overall ESG rating ascribed by MSCI ESG Research to a company is just one of the additional responsible investment inputs we consider when assessing the merits of an investment case. It provides a quantitative proxy by which to measure improvement.
The rating is not absolute; rather, it is relative to the standards and performance of a company’s industry peers. It is used to help ensure that as far as possible the fund invests in companies which are considered ‘best in class’ within their sector. Additionally, there are some portfolio companies that are not rated by MSCI; these are primarily our listed impact and energy investment trusts.
Crucially, we do not use this metric as a hard block. Rather, it is used as a flag to help guide our investment decision making and engagement activities. This allows us to do our own analysis on the investment case, rather than being entirely reliant on rigid metrics that may not reflect a company’s evolution. Please see the previous section for examples of this in action.
KEY CHANGES IN Q4 2023
The ESG ratings of the fund remained broadly similar over the quarter, although there has been a subtle shift towards more AA and AAA rates companies, which is pleasing to see.
Catholic screen results
At the end of each quarter, we run the fund’s equity holdings through MSCI ESG Research Manager (our third party ethical screening provider). This report highlights the proportion of the fund that would have been in breach if the fund applied a Catholic faith-based screen as outlined as follows.
At the end of the latest quarter there were six companies that breached any of the above screens.
Therefore, as of 31 December a total of 1.20% of the total fund’s holding would have been excluded had the fund applied the screen. This chart documents how this has changed over the past 12 months.
