Companies with a lower greenhouse gas footprint have increasingly outperformed ‘browner’ companies, according to a comprehensive analysis by broker Liberum.
Over the last 20 years, the size of this ‘green premium’ to the market has been around 2.3% per year, adds the broker, which has developed a new metric, carbon-beta, to highlight the exposure of a company’s share price to climate risks.
Based on absolute greenhouse gas emissions in tonnes of CO2 equivalent and greenhouse gas intensity of their business (emissions per unit of annual sales), the broker has ranked companies in the FTSE ALL Share and StoXX Europe 600 index.
Liberum adds the caveat that some companies do not disclose fully carbon emissions, but based on what is available its five companies with the highest carbon-beta are: Bakkavor Group PLC (LON:BAKK), ContourGlobal PLC (LON:GLO), TI Fluid, OneSavings Bank and On the Beach.
The worst scores are unsurprisingly heavy fossil fuel users such as miners and oil companies: Evraz PLC (LON:EVR) ; Hochschild Mining PLC (LON:HOC); Fresnillo; Glencore and Tullow Oil have the lowest ratings.
Liberum adds that while no one would choose a company solely based on its carbon-beta, it is increasingly important and adds a new dimension to analysis that might have been overlooked in the past.