It then identified which of these companies should be better positioned for the future by the quality of their environmental strategies.
The report outlines how the issue of climate change has moved to centre stage for policy makers, especially in the European Union, and how they are increasingly focused on reducing carbon. It identifies the likely policies that will be used to cut carbon emissions. The paper also highlights how this issue will affect companies across all sectors – not only traditional heavy emitters. Merrill Lynch has mapped out leading companies’ carbon footprints and indicated how much it would cost them, using certain assumptions, to become carbon neutral.
“Most policy makers have accepted they must act to reduce emissions. Now the priority for investors is to ascertain what the action will be and how companies will be affected,” said Zoe Knight, senior director of Socially Responsible Investing at Merrill Lynch and author of the report. “We believe backing the carbon leaders by sector is a high-quality, defensive strategy and reduces investors’ carbon footprint.”