Sustainable saving – one of the best ways to help reach the 2-degree target

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Graduates looking ahead
04-06-18 8:56 | Responsible investment | Environment

Your consumption causes emissions, and so do your savings. For the world to have chance of limiting global warming to 2 degrees, personal carbon footprint must be reduced from around 19 tonnes today to 1 tonne of CO2 emissions per year. A strict vegetarian diet would reduce personal carbon footprint by close to 1 tonne. Limiting flying and refraining from driving a car could shave off another 1 tonne. 

This is not enough, and a much more efficient way of reducing personal carbon footprint is to look at your pension and savings account. By investing in climate solutions, you can ensure that your carbon footprint is in line with a 2-degree scenario. Investing USD 1,000 in a renewable energy company could reduce personal carbon footprint by nearly 1 tonne. Another USD 9,000 reduces personal carbon footprint by 8 tonnes. In line with investing more money in climate solutions, your carbon footprint, and contribution to the 2-degree target, can offset the footprint from your consumption. If everybody reallocated their pension and other savings in this way, there would not be a climate crisis. This also works the other way around. Investing USD 1,000 in an oil company increases carbon footprint by 0.3 tonnes. Another USD 9,000 increases it by 3.4 tonnes. What this also suggests, is that investing in climate solutions rather than simply excluding harmful stocks, has a higher effect on your footprint. The more money you have in your pension and savings account, the more responsibility and power you have to help steer the world towards a sustainable future, through investing in sustainable companies and funds. 

 

Our calculations

The company Vestas Wind Systems was used as proxy for the renewable energy company. With every kwh of wind electricity produced,828 grams of CO2 per kwh of electricity is saved compared to energy produced by coal. Vestas’ wind capacity generates over 23 million MWh of electricity per year, which is enough to reduce global carbon emissions by 11 million tonnes of CO2. As at the end of May 2018, Vestas’ market cap is USD 13.4 billion. With USD 1,000 invested, your holding in the company is 10^-5%, equaling a reduction in carbon emissions of 0.82 tonnes out of the total 11 million tonnes. Scope 1 emissions of the company was considered in the equation. 

Exxon Mobil was used as proxy for the oil company. With USD 1,000 invested, you own 3x10^-7% of the company, meaning that you are responsible for 0.34 tonnes out of the total 117 million tonnes of CO2 emissions that the company emits (scope 1 considered). 

Current total carbon footprint of 19 tonnes was based on a Swedish footprint per person and year (Source: WWF) which includes consumption and savings. The numbers regarding savings from cutting down on meat consumption, travel, and refraining from driving are based on Swedish habits (Source: Statistics Sweden, the Swedish National Food Agency and ICAO). 

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