Carbon Emissions Report - June 2019

LGS considers climate change risk as one of the most important issues facing the Fund. The United Nations recognises this and has designated Climate Action as one of its Sustainable Development Goals.

LGS' Responsible Investment approach uses a combination of negative screening to limit our exposure to companies with high carbon emissions and positive screening to identify low carbon investment opportunities.

LGS International Portfolio Carbon Footprint

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International EquitiesWeighted Average
Carbon Intensity
Carbon Emissions
  t CO2e / $M Revenue t CO2e / $M Invested
LGS Aggregate Portfolio 124.5 101.7
Benchmark 192.6 143.8
Relative to Benchmark1 (%) -35.4% -29.3%

Weighted Average Carbon Intensity (WACI)2 measures the Portfolio's exposure to carbon-intensive companies and is recommended by the TCFD3.

In the first half of 2019, WACI was 35.4% lower than the Benchmark Index compared with 38.0% in 2018.

Carbon Emissions4 for LGS' International Equities were 29.3% lower than the Benchmark compared with 26.5% in 2018. This strong performance is attributed to positive stock selection in the Utilities and Materials sector. Underweight sector allocation (-0.7%) in Utilities, a sector which emits the highest amount of C02 on average, also positively contributed.

The table below provides a breakdown of WACI at Fund Level for LGS' International Equities Portfolios.

 Weighted Average Carbon Intensity
  t CO2e / $M Revenue  
  Fund Benchmark Performance
vs. Bench.
Portfolio A 262.1 329.8 -21%
Portfolio B 134.8 173.7 -22%
Portfolio C 124.6 173.7 -28%
Portfolio D 20.2 173.7 -88%
Portfolio E 106.2 173.7 -39%
Portfolio F 133.6 173.7 -23%
Portfolio G 52.7 192.6 -73%
Portfolio H 124.1 329.8 -62%
Portfolio I 163.6 173.7 -6%

As the world transitions towards a low carbon economy and greater reliance on renewable energy, a portion of existing fossil fuel reserves may remain unused with assets becoming consequentially stranded. LGS seeks to mitigate this risk through its Responsible Investment approach and will not make investments in companies that derive 33.3% (one-third) of their revenues from high-carbon sensitive activities.

In the first half of 2019, companies owning Fossil Fuel Reserves constituted only 4.9% of LGS' International Equities Portfolio compared with 5% in 2018.

32.8% of the Portfolio is made up of companies involved in Clean Technology Solutions compared with 29.3% in 2018.

 
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LGS Australian Portfolio Carbon Footprint

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Australian EquitiesWeighted Average
Carbon Intensity
Carbon Emissions
  t CO2e / $M Revenue t CO2e / $M Invested
LGS Aggregate Portfolio 239.4 177.0
Benchmark 278 194.5
Relative to Benchmark1 (%) -13.9% -9.0%

Weighted Average Carbon Intensity (WACI)2 measures the Portfolio's exposure to carbon-intensive companies and is recommended by the TCFD3.

In the first half of 2019, WACI was 13.9% lower than the Benchmark Index compared with 16.2% in 2018.

Carbon Emissions4 for LGS' Australian Equities were 9.0% lower than the Benchmark compared with 9.3% in 2018. This strong performance is attributed to positive stock selection in the Utilities and Materials sector. Underweight sector allocation (-1.0%) in Utilities, a sector which emits the highest amount of C02 on average, also positively contributed.

The table below provides a breakdown of WACI at Fund Level for LGS' Australian Equities Portfolios.

 Weighted Average Carbon Intensity
  t CO2e / $M Revenue  
  Fund Benchmark Performance
vs. Bench.
Portfolio 1 260.8 278.0 -6%
Portfolio 2 240.0 278.0 -14%
Portfolio 3 172.7 278.0 -38%
Portfolio 4 32.6 206.7 -84%
Portfolio 5 253.5 278.0 -9%
Portfolio 6 352.9 278.0 -27%
Portfolio 7 172.2 206.7 -17%

As the world transitions towards a low carbon economy and greater reliance on renewable energy, a portion of existing fossil fuel reserves may remain unused with assets becoming consequentially stranded. LGS seeks to mitigate this risk through its Responsible Investment approach and will not make investments in companies that derive 33.3% (one-third) of their revenues from high-carbon sensitive activities.

In the first half of 2019, companies owning Fossil Fuel Reserves constituted only 15.6% of LGS' Australian Equities Portfolio compared with 17.7% in 2018.

15.4% of the Portfolio is made up of companies involved in Clean Technology Solutions compared with 15.4% in 2018.

 
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1. International Benchmark: MSCI ACWI ex. Australia; Australian Benchmark: MSCI Australia IMI.
2. Weighted Average Carbon Intensity (WACI) is the Portfolio’s exposure to carbon-intensive companies, expressed in tons CO2e / $M revenue. Metric recommended by the TCFD.
3. Task Force on Climate-related Financial Disclosures (TCFD). More information on the TCFD is available via www.fsb-tcfd.org.
4. Carbon Emissions include Scope 1 and Scope 2 emissions.
5. The aggregate figure provided for the LGS Australian and International portfolios is the weighted average of each of our external fund managers’ footprint.
6. The report above has been prepared using data provided by MSCI ESG Research.

The information on this website is of a general nature only and does not take into account your personal objectives, situation or needs. You should consider obtaining professional financial, taxation and or legal advice tailored to your personal circumstances prior to making any financial decision.