A major public pension fund is backing a new project to benchmark the energy productivity of companies – how much revenue or production they achieve for each unit of energy that they consume.
The Energy Productivity Index for Companies is the first global energy productivity benchmark for listed industrial companies.
The index was officially launched in New York on September 21 by the US-based ClimateWorks Foundation and ClimateWorks Australia.
The California State Teachers’ Retirement System (CalSTRS), the world’s thirteenth largest public pension fund, will act as lead investor. CalSTSRS also is providing industry knowledge and a portfolio of companies which will be used to demonstrate how the analysis will be done.
The index will quantify energy risks and the financial value of improving energy productivity – information that investors will be able to access, according to Amandine Denis, head of research for ClimateWorks Australia.
“The project will provide investment funds with a greater understanding of energy-related issues in their portfolios and drive companies to improve their energy performance,” she said.
The index also will build an energy risk profile for selected sectors and highlight the differences between companies within each sector, Denis said.
“A company’s energy performance will be assessed in terms of their revenue or production levels per unit of energy used. Other factors such as exposure to energy risks and potential financial uplift will be considered as part of the benchmark,” she said.
Preliminary results show that improved energy efficiency performance could deliver a 2-10 percent annual increase in company’s profit (measured through Earnings before Interest and Tax (EBIT), according to the partners.
Brian Rice said, CalSTRS portfolio manager for corporate governance described energy productivity “as a strategic business tactic with growing importance.”
“It is associated with mitigating carbon pollution– which in turn reduces business risk. The project will demonstrate the process investors need to implement to identify and engage with companies and succeed in improving energy productivity performance,” Rice said.
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