Methodology

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Methodology

The ranking universe was defined as Morningstar® Medalists with the Morningstar Low Carbon Designation™ in six diversified equity categories — Diversified Emerging Markets, Foreign Large Blend, Large Blend, Large Growth, Large Value, and World Large Stock—as published on May 17, 2018.

Funds were ranked using an asset-weighted Carbon Abatement ROI score of the equity holdings in the fund from September 30, 2017 through September 30, 2018.  Each fund was assigned a quarterly score that was then averaged.

To calculate the fund scores, Canetic first identified equity holdings in renewable and cleantech companies defined as pure play – the majority (50% or more) of the firm’s activity must be focused on climate impact. Climate impact is defined by Canetic as business operations that actively and directly reduce Greenhouse Gas emissions and where CO2 reduction capability can be reasonably and sensibly quantitatively defined and projected.

This series of rankings is meant to identify which vehicles in a specific group can provide additional climate benefits by effectively and impactfully investing in climate solutions such as renewable energy and cleantech.  The Vested Impact initiative is not meant to generate an overall ESG ranking and is not an overall ranking of how vehicles use the multitude of investor tools that are available to actively address climate change along with associated risks and opportunities.

Canetic’s assessment of a company’s Carbon Abatement ROI is based on:

  • The firm’s carbon savings contribution determined by its position in the value chain

  • The ability of the firm to deliver carbon abatement

  • CO2 savings values from Canetic’s worldwide proprietary database of emissions factors

Implications, assumptions, and limitations of the methodology:

  • The scoring methodology accounted for the percentage of fund invested in pure play renewables as well as the projected effectiveness of the investment to achieve carbon abatement over 10 years.

  • Funds are listed based on their positive climate change impact measured as carbon savings delivered by investments in pure play renewable energy companies. These companies are key to meeting a 1.5 scenario, however, we acknowledge that they are not the only players in climate solutions.

  • Data on fund holdings was not always available on a direct comparison basis. The methodology attempted to used end-of-quarter data for each fund’s quarterly score where available.