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Rumi Mahmood

Rumi Mahmood

Vice President, MSCI Research

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Footprinting the World’s Largest Asset Managers

  • Our research to assess the carbon footprint of the world’s 10 largest asset managers revealed that big European players were marginally less carbon-intensive than their U.S. peers.
  • We found that assets under management were proportional to larger financed emissions. This was particularly true at U.S. fund managers in our peer group, where each USD trillion invested led to an extra 10-20 tons of CO2.
  • Asset managers with net-zero commitments may want to assess their entire book of assets to have a baseline for target setting and to be able to monitor alignment progress, alongside engagement and decarbonization efforts.

Asset managers globally are increasingly acknowledging the need to accelerate the transition towards net-zero emissions and the key role they have to play in delivering on the goals of the Paris Agreement. Coalitions such as the Net Zero Asset Managers initiative (NZAM) and Glasgow Financial Alliance for Net Zero aim to support the goal of net-zero greenhouse gas emissions (GHG) by 2050 in line with efforts to limit global warming to 1.5°C.

Specifically, asset managers that are NZAM signatories have committed to setting interim targets for the proportion of assets to be managed in line with the attainment of net-zero emissions by 2050. They have also committed to reviewing the target at least every five years, with a view to increasing this proportion of AUM until 100% are included. To achieve this, a first step may be to assess aggregate emissions levels across their portfolios.

To gauge the current state of global fund investments, we assessed ETF and mutual fund assets of the 10 largest asset managers globally by AUM, using data from MSCI’s Climate Lab Enterprise. With over USD 25 trillion in assets, they represent almost 25% of the approximately USD 110 trillion invested in funds globally,1 and nine of them are NZAM signatories. In our research, we calculated emissions metrics for equity and debt holdings across funds of these asset managers and aggregated the results to represent firm-level metrics.2


Europe led the way

U.S. firms accounted for seven of the 10 largest asset managers, with the remainder European. On carbon intensity3 (Scope 1 and 2), the European fund managers were clustered below or around 150 tons CO2/USD million sales, while U.S. ones hovered closer to 200 tons CO2/USD million (see the exhibit below). European fund providers generally had more strategies focusing on European companies, which were often better positioned versus their non-European peers in addressing environmental risks. This also aligns with findings from the most recent NZAM net-zero alignment progress report4 and signatory corporate disclosures, which indicated that the European asset managers within this sample generally had a higher initial percentage of their AUM committed to be managed in line with net-zero (ranging between 20%-35%) relative to the U.S. ones (ranging between 10%-25%).


Carbon intensity and financed emissions vs. AUM

This exhibit shows the range of mechanisms available for investor engagement, ranging from informal to formal.

Source: MSCI ESG Research, as of Oct. 12, 2022.


Size mattered, but asset class did not

Size mattered when it came to financed emissions.5 We observed a moderate correlation between AUM and financed emissions. With a larger breadth of fund offerings across geographies and sectors, the larger fund providers exhibited higher financed emissions.

The asset manager exhibiting the highest carbon intensity and financed emissions was a global bond fund manager with significant exposure to emerging markets and high yield debt. Among U.S. fund managers, each USD trillion invested led to an extra 10-20 tons of CO2. Comparing equity and fixed income assets revealed a clustering of carbon intensity between 100-200 CO2/USD million sales for both asset classes. Further, we found that asset managers with more carbon-intensive equity assets were likely to have more carbon-intensive fixed income assets.


Carbon intensity: equity vs. fixed income

This exhibit shows the range of mechanisms available for investor engagement, ranging from informal to formal.

Source: MSCI ESG Research, as of Oct. 12, 2022.


Footprinting at the enterprise level

For investors, assessing the carbon footprint of a portfolio is often the first step in addressing the investment implications of climate change. Although it can be a complex data exercise, asset managers with net-zero commitments may similarly assess all their assets across all funds to help support their ongoing emission reduction efforts and commitments.



1MSCI ESG Research, Sept. 30, 2022.

2Asset types that fall out of footprinting coverage include commodities, derivatives, securitized assets and municipal bonds.

3Carbon intensity, at the company level, is an efficiency ratio defined as annual carbon emissions/annual sales. Since companies with higher carbon intensity are likely to face more exposure to carbon-related market and regulatory risks, this metric indicates a portfolio’s exposure to potential climate-change-related risks relative to other portfolios or a benchmark. Agnostic to ownership share, it also facilitates comparison with non-equity asset classes.

4“Net Zero Asset Managers initiative Progress Report.” NZAM, 2021.

5Represents a normalized measure of a portfolio's contribution to climate change that apportions companies’ carbon emissions across all outstanding shares and bonds. This figure measures the total annual Scope 1 and 2 carbon emissions (reported or estimated) associated with USD 1 million invested in the portfolio. It is calculated as the sum of companies’ carbon emissions weighted by the most recently available enterprise value including cash (EVIC) and by the weight of companies in the portfolio.



Further Reading

Net-Zero Alignment for Multi-Asset-Class Portfolios

Constructing Net-Zero Portfolios: Three Approaches

Fund ESG Transparency: Quarterly Report 2021