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Crédit Agricole Group subsidiary LCL launched two investment vehicles, namely LCL Carbon Offsetting World Shares and LCL Carbon Offsetting Multi-strategy in March 2020, and secured the ISR France label (socially-responsible investment) for both in May 2021. They are designed to offer investment solutions that firstly reduce their carbon footprint, and offset the footprint that cannot be eliminated.
The main aim of LCL Carbon Offsetting funds is to reduce the volume of greenhouse gas emissions in their investments and offset their residual carbon footprints.
Two funds were created to meet different investment objectives through their investment strategies (share asset classes or diversified), with one world shares fund and one multi-strategy fund:
- LCL Carbon Offsetting World Shares (LCL Compensation Carbone Actions Monde)
- LCL Carbon Offsetting Multi-strategy (LCL Compensation Carbone Multi-Stratégie)
A feature of these funds is that they follow a two-stage approach to sustainability relative to carbon footprints:
- Stage 1: Reducing the portfolio’s carbon footprint
To select those companies best placed to address climate change, the Carbon Offsetting Funds’ management teams use data from the Carbon Disclosure Project (CDP), the responsible investment methodology designed by CPR Asset Management (an Amundi subsidiary), and the Reprisk, Sustainalytics and MSCI ethical filters.
The investment universe comprises businesses that are most committed to an energy and environmental transition process, regardless of their industry. LCL believes that all economic stakeholders must act to reduce their greenhouse gas emissions and switch their energy mix to move towards decarbonisation of energy use.
Businesses need to demonstrate sound climate risk management to join this investment universe. The CDP allocates a grading between A and D (where A is for businesses demonstrating the best practices). The investment universe includes A and B grades.
Businesses with the poorest Environment, Social and Governance (ESG) stances and those involved in the most serious controversies are excluded.
These funds are actively managed in a universe with a reduced climate risk profile, the target being to reduce the funds’ carbon footprint by 20% to 30% in comparison with its investment universe.
- Stage 2: Offsetting the portfolio’s carbon footprint
All human activities generate the greenhouse gases responsible for climate change. The LCL Carbon Offsetting funds finance businesses committed to reducing their climate impact and offset their residual greenhouse gas emissions by acquiring carbon credits from two projects, namely Marajo and Cardamom.
The Marajo Forest project is located in the Amazon river delta, in the eastern part of the Amazon rainforest. As logging and transporting timber on the river are the two main sources of income for local communities and one of the principal causes of deforestation in the region, this project is helping combat Amazon deforestation by offering new economic activities to local populations (subsistence farming, creating nurseries to restore damaged areas of forest, and growing cupuaçu).
The Cardamom project is located in Cambodia, in the mountain range on the border with Thailand. The region has the second largest virgin tropical forest in south-east Asia, and is experiencing considerable pressure from illegal logging and poaching. This offsetting project is focused on the south of the region, and aims to preserve biodiversity and protect the habitat of many indigenous species.
Both projects have the VCS (Verified Carbon Standard) label, one of the strictest carbon offsetting certification labels recognised worldwide.
Each year, after calculating the fund’s carbon footprint, EcoAct offsets the volume of CO2 emissions emitted by the fund. As proof of the transfer of title in the carbon credits, EcoAct provides a carbon credits transfer certificate and an offset certificate, as evidence of, and attesting to, the carbon offsetting.
Direct emissions generated by the company's activity.
Indirect emissions associated with the company's electricity and heat consumption.
Emissions induced (upstream or downstream) by the company's activities, products and/or services in its value chain.
Carbon sinks creation, (BECCS, CCU/S, …)
Emissions avoided by the activities, products and/or services in charge of the project, or by the financing of emission reduction projects.
Scopes 1, 2 et 3 - Financing of low-carbon producers, or divestment from carbon-emitting assets
- Quantifications available on the complete project sheet to download
Avoided emissions -Carbon offsetting: Cardamom / Marajo projects
- The Marajo project avoids more than 130 kt of CO2 per annum.
- The Cardamom project avoids 3m tonnes of carbon emissions per annum
A fin mai 2021:
- L’empreinte carbone de LCL Compensation Carbone Multistratégies est de 23% inférieure à celle de son indice de référence : MSCI World Acwi ;
- L’empreinte carbone de LCL Compensation Carbone Actions Monde est de 26% inférieure à celle de son indice de référence. Il s’agit d’un fonds non benchmarké. En cible c’est un 50% MSCI World / 50% EGBI (obligations monde) maintenant il est surtout géré en fonction de l’enveloppe de volatilité de 10% max pour être en ligne avec le SRRI de 4 (max 5).
This project mainly falls within the bounds of SDG 13 Urgent action to combat climate change.
In addition, carbon offsetting projects also contribute to the following SDGs:
- SDG 7 – Affordable and clean energy
- SDG 8 – Decent work and economic growth
- SDG 9 – Industry, Innovation and Infrastructure
- SDG 12 – Responsible consumption and production
SDG 15 – Life on land
Financial investors have a role to play in preserving the planet. Awareness of these issues in asset management enables a responsible stance to be adopted. Investors are seeking companies that are committed to reducing their carbon footprint. The number of companies making such commitments is gradually increasing.
The success of this range of funds is based on the rising general awareness (of governments, businesses and the public at large) of the need to contribute to climate neutrality.
A number of partnerships were formed through the launch of these two funds:
- CPR Asset Management – Company managing the LCL Carbon Off-Setting funds, an Amundi subsidiary.
EcoAct – European leader in voluntary carbon offsetting, an Atos subsidiary.