Ethos ESG (ethosesg.com) announces the launch of a Carbon Neutral Certification program for mutual funds and exchange-traded funds (ETFs), developed in conjunction with Change Finance. The US Large Cap Fossil Fuel Free ETF from Change Finance (CHGX) is the programs first certified carbon-neutral fund.
With the ever-increasing urgency of addressing climate change, mutual funds and ETFs have an important role in helping to finance the transition to a sustainable economy. Unfortunately, there has been a lack of transparent information about which funds are genuinely contributing to this transition.
Ethos ESG founder and CEO Luke Wilcox explains that, As we race to keep the planet under the 15C threshold set by the Paris Climate Agreement, the investment industry must take a more active role in financing clean energy and other climate solutions, not the fossil fuel economy of the past. Ethos ESG is proud to launch a program that helps providers of mutual funds, ETFs, and other investment products demonstrate their commitment to a sustainable future.
Ethos ESG and Change Finance worked together to develop the methodology for the certification. Through the certification, Ethos ESG performs an independent analysis of a funds carbon footprint (covering Scope 1 and Scope 2 emission) and carbon credits (offsets) to verify whether the fund is carbon neutral during a specified period.
The carbon footprint consists of verified Scope 1 and Scope 2 emissions of every holding of the fund. To verify emissions, Ethos ESG compares self-reported information from companies with third-party datasets. For companies that do not report emissions, Ethos ESG uses statistical methods such as linear regression to model expected emissions.
Linear regression involves a best-fit model for predicting emissions, based on testing of 15+ independent variables related to carbon emissions (such as carbon intensity per million dollars revenue). Most variables use data from a companys closest set of peers, for example, the average carbon intensity of peers.
Once certified as carbon neutral, Ethos promotes a fund with Certified Carbon Neutral badges on our platform for financial advisors, wealth managers, asset managers, and retail investors, as well as through our network. Ethos also grants publishing rights to the fund manager to promote the fund as certified carbon neutral.
Ethos CEO Luke Wilcox explained that, By using Ethos innovative data and platform we are able to help funds achieve and validate the goal of carbon neutrality. With ESG considerations continuing to grow, including more commitments to net-zero emissions, we are thrilled to launch this program.
For more information on the Carbon Neutral Certification, visit: Carbon Neutral Certification for Funds (ethosesg.com)
Ethos ESG is an ESG software and data platform for financial advisors, institutions and investors. Ethos offers data and analytics covering the impact of 7500 stocks and 6000 funds across 45 causes. Ethos uses a combination of independent third party sources, government filings, company data and proprietary research to come up with transparent ESG ratings. Customers include financial advisor firms across the US and Australia, individual investors and corporate clients.