Tackling the Climate Change
The world’s leading independent climate actors have warned that urgent and unprecedented changes are required to avoid a catastrophic environmental fallout. The UN Intergovernmental Panel on Climate Change (IPCC) reports are unequivocal on the current issues faced by our planet.
At RAM AI, we continuously develop our capacity to assess the risks and opportunities presented by climate change policy to our investment portfolios; we integrate, when relevant, this insight into our investment processes. We recognise that this effort requires more than one dimension. We aim not only to apply strict guidelines to preserve the biodiversity and limit climate change below 2° within our investment portfolios, but also embrace an effort at corporate level. We have set an ambitious plan to reduce RAM AI’s own carbon footprint by reducing energy and water consumption.
While not all RAM Funds have a climate objective, many of them integrates ESG characteristics to mitigate adverse environmental impacts.
Decarbonisation of our portfolio
Trough in-depth monitoring of CO2 emissions of companies we invest in, and limiting investments in fossil fuel, we aim to have a positive impact on the climate. We thrive to reduce Carbon Emissions of our investment portfolios.
Leveraging on ESG data to participate to the climate transition
In 2020, RAM AI has launched a Stable Climate Global Equities strategy, leveraging on ESG data to participate to the climate transition. As the Climate Change emergency continues to grow, RAM AI believes its role as an asset manager is to provide investors with a differentiated solution to low-carbon investing.
While many managers opt for an unidimensional approach to climate change within portfolios by reducing the weight of the worst polluters, RAM AI’s sustainable alpha approach aims to leverage a myriad of ESG and non-ESG data sources to identify the most attractive sustainable return opportunities in each industry. Our research effort is based on hypothesis testing; understanding how the ESG profile of a given company impacts, not only future stock performance, but also current/future fundamentals and ultimately financial returns.
We believe ESG investors need innovative solutions with clear and ambitious climate objectives and RAM AI has explored ways in which to do it.
Carbon offsetting is an excellent tool for a committed asset manager like us, as it represents a short-term solution to help minimise our impact. However, our primary goal is to decarbonise our Portfolio as much as possible, using the vast potential of our Machine Leaning Infrastructure and the volume of data available.
RAM AI offsets the RAM Stable Climate Global Equities Strategy’s (low) carbon emissions (Scopes I and II) using carbon compensation certificates (CERs) in accordance with the Clean Development Mechanism (CDM) rules at no additional cost to investors.
Carbon Offset Study case: Biomass Project
Project selection is vital when offsetting the carbon emission of a portfolio. Project efficiency in carbon reduction is highly dependent on the type of projects selected. Indeed, projects in specific renewable energies (i.e. Wind Power) too often lack integrity. Conversely, in projects in the industrial gas sector, biomass shows interesting additionality.
Moreover, among our key criteria, we ensure that the project activity contributes towards sustainable development and addresses for example key issues such as:
- Social well-being
- Economic well-being
- Environmental well being
Assessing CO2 Emissions
RAM AI believes assessing the carbon footprint of a portfolio is an important tool to support climate reporting and risk assessment and it is a key element of transparency and good governance for our investors. For equities and corporate fixed-income RAM AI assesses carbon emission of the respective portfolios using Scope 1 and Scope 2 data for RAM’s standard report, but also closely monitoring scope 3 emission data.
RAM AI uses metrics as defined by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), which is backed by the central banks of the G20 countries.
While there exists now a standard to estimate the carbon footprint of a portfolio for Equities and Corporate fixed Income, sovereign bonds have remained largely unexamined from a carbon risk and reporting perspective due to a lack of appropriate metrics and actionable insight.
Despite the fact that the industry has not yet a standardised reporting and assessment of carbon emissions for sovereign bonds, RAM AI has worked on a methodology to assess carbon emission of our sovereign exposure based on CO2 emissions (kg per PPP $ of GDP). This approach helps to have an exhaustive coverage of the respective portfolio impact on climate change.
RAM AI Carbon Footprint
The negative impacts linked to the climate crisis are no longer fatalistic predictions of our future. For millions, it has become their day-to-day reality. Human activity is highly responsible as acknowledged by 97% of climate scientists worldwide. RAM AI is, therefore, determined to undertake creative and resourceful actions to minimise its carbon footprint.
At RAM AI, we compensate our Co2 emissions related to air travel and freight. Through our Corporate Green Policy, we encourage employees to use environmentally friendly transportation to work, notably by offering an annual financial subvention. We encourage limiting business trips by providing access to performant Videoconferencing systems.