Aeon Investment Management recently developed an environmental policy to create a framework that identifies companies’ current and potential risk factors and to quantitatively integrate these factors (depending on company disclosure) into the investment philosophy to ensure responsible investment.
We aim to identify companies that actively reduce their carbon footprint, disclose their emissions and have an ongoing positive effect on the South African society and the global community at large.
The rapid awareness of the effect that companies have on the environment has resulted in an increased requirement from investors and other stakeholders for companies to disclose their environmental metrics e.g. GHG emissions. Aeon Investment Management has created a framework that identifies a broad range of company risks. These risks may not be applicable to all companies and do not encompass all the risks that companies may face. In determining whether to continue to invest in a company, Aeon Investment Management undertakes an analysis on the company by considering the following:
We determine the company’s level and relevance of environmental metrics disclosure:
o Does the company disclose its GHG emissions, energy consumption, water usage and waste production in its Sustainability/ Integrated Report?
o Has the company disclosed the trends in its GHG emissions, energy consumption, water usage and waste productions to determine any changes (positive and negative) to the above-mentioned factors and monitor the implementation and continued practice of their sustainability policies?
o Going forward, has the company disclosed a plan to reduce its environmental impact?
o If applicable, has the company recently or historically had any environmental catastrophes such as hazardous spills and subsequent fines? Has the company disclosed the fines and programs they have implemented to rehabilitate the damage caused by these catastrophes?
2. Water (if applicable)
o Has the company disclosed its water usage and the amount of water it has recycled in its Sustainability/ Integrated Report?
o Does the company have an extensive policy (-ies) in place addressing the reduction of water usage and/or recycling water?
o Has the company disclosed its GHG Scope 1, Scope 2 and Scope 3 emissions in its Sustainability/ Integrated Reports?
o What is the company’s carbon emissions per unit produced relative to its competitors?
o What initiatives has the company implemented to lowering their emissions and reducing their carbon footprint?
o Does the company fully and publicly endorse the Paris Agreement or any other climate agreements? What formal commitments have been implemented by the company towards addressing climate change?
4. Waste (if applicable)
o Has the company disclosed the level of tailings and overburden waste it produces?
o Does the company produce any hazardous waste and how has this been eliminated?
o Has the company disclosed its electricity usage or relevant benchmark metric?
o Has the company implemented any renewable energy initiatives within the business?
o What is the company’s electricity usage per unit of production and what is the historical trend of this production?
More information available online: https://www.aeonim.co.za/wp-content/uploads/2020/03/Aeon-Investment-Management-Environmental-Policy-1.pdf