The As You Sow Foundation, a California-based investor pressure group, has compiled the figures on 8,500 mutual funds on sale around the world, with collective assets of more than £9 trillion.
It is launching a website, www.fossilfreefunds.org, where small investors can analyse the carbon footprints of the funds they invest in.
Among the 1,300 funds on sale in the UK, BlackRock‘s Emerging Europe trust was identified as the “dirtiest sector-diversified fund” with a carbon footprint among its stocks that was put at almost 1,700% that of the MSCI All-Country World Index.
The trust, managed by Sam Vecht and Christopher Colunga, has had a challenging few years on the performance front, like many of its emerging markets peers. It is down 7.4% a year in dollar terms over the three years to September 30, according to figures from FE Analytics, though that compares to a 12%-a-year loss for the MSCI Emerging Markets Europe index.
A BlackRock spokesman said: “We have a fiduciary obligation to invest in the markets our clients choose, against specific benchmarks. Relative to its benchmark, the BlackRock Emerging Europe fund is underweight in oil, gas, and refining and overweight lower carbon industries. The fund’s investable universe has more than 55% of its holdings concentrated in carbon-intensive industries, including energy and materials.”
He added: “We believe that investors can no longer ignore climate change. We are at the start of a long-term educational journey for both ourselves and the market about carbon risk in portfolios, which is why this year we incorporated ESG and carbon-specific data into our Aladdin risk management platform.”
Second and third place in the list of the most carbon-emitting mutual funds were taken by two from Standard Life Investments; the UK Equity Recovery Fund, run by David Cumming, and the Global Emerging Markets fund, with carbon footprints 610% and 573% higher than the global index, respectively.
A spokeswoman for Standard Life said that “carbon footprinting funds is a useful mechanism” but argued that funds should be compared to their own benchmarks, rather than to the global index.
She said: “The MSCI ACWI is the global all world index which will have a different exposure to sectors than regional stock markets. Comparing UK portfolios or emerging market portfolios with an all world/global index is not providing realistic comparisons.”
But she added that Standard Life welcomed the fact that retail investors could look at funds’ carbon footprint: “Fund managers need to engage with all companies to assess how they are reducing their carbon exposure.”
In a statement, Andrew Howard, head of sustainable research at Schroders, said the firm had a complex process for evaluating the impact of climate-change on stock selection, and “attempting to sidestep that in-depth analysis by focusing on a single number – a carbon footprint – cannot capture a complex picture, and may well be misleading.”
Premier did not respond to a request for comment by press deadline. GAM declined to comment.
Ecofin could not be reached for comment in time for press deadline, while Orbis declined to comment.
A spokeswoman for Invesco said: ““The managers’ objective is to invest in the shares they believe will produce the best long term returns for investors, in accordance with the fund objectives and applicable regulations.”