Kingspan Group is an environmental leader and a holding in the Pax Global Environmental Markets Fund. The Fund invests in companies that are developing innovative solutions to resource challenges – including water, energy, waste, and sustainable food & agriculture. In this article we discuss Kingspan Group as an example of how positive environmental impact is a natural outcome of the Fund’s investment process.
A familiar metric for measuring the carbon emissions made during business activities is “carbon footprinting”. The increased focus on carbon risks in portfolios is positive, but for some companies carbon footprinting doesn’t represent the full story on emissions. Importantly, it does not take into account the CO2 emissions avoided (relative baseline1) by the deployment of companies’ environmental products and services over their lifetimes. We believe that the alternative methodology we have developed, which measures the net CO2 emissions, gives a more meaningful picture.
Kingspan Group, a company that manufactures high efficiency insulation boards is a good example. Commercial and residential buildings are a major source of CO2 emissions in the UK (the principal market for this company), representing around 45% of total UK emissions, mainly through energy used for space heating2. UK buildings are among the most expensive to heat in Europe due to poor insulation and maintenance3. The production and installation of the boards does result in CO2 emissions. However, once the boards are in place, they result in significant energy savings and associated reduction in CO2 emissions.
We subtract the company’s direct and indirect carbon emissions during one year with the carbon avoidance achieved through the energy savings in the same one year period. Kingspan Group provides an attractive net carbon emission solution over time.
For information about the Pax Global Environmental Markets Fund, visit the Fund page here. To learn how we measure the Fund’s environmental impact, read the blog post Making an Impact: Investing in the Transition to a More Sustainable Economy.
1 A baseline can be defined as the comparison of relevant environmental performance data derived from a specific project, product or service against a relevant baseline data for the assumed environmental impact that would occur if the project, product or service had not taken place or was not used.
As of 3/31/18, Kingspan Group was 0.9% of the Pax Global Environmental Markets Fund. Holdings are subject to change.