Why do we care about cement? The cement part of concrete accounts for approximately 70% of its carbon emissions. Concrete production accounted for more than 8% of all global greenhouse gases in 2021.
On our journey to net zero, we are using many different approaches in order to achieve our goal. One area that we looked at recently was the high-emitting cement sector. This sector accounts for a huge part of global emissions, so we wanted to understand how we are exposed to the sector, and whether this is something that can support our journey.
Even though cement may generate a lot of emissions, it is such a vital part of modern society. If we can invest in a highly-emitting company and support it to decarbonise, we believe that this will help the Fund to earn superior returns into the future, and protect us from the risk of financial loss which may occur from investing in a company which fails to transition.
During our investigations, we looked at a variety of different pieces of information:
- What companies we are exposed to.
- Industry tools to assess how prepared companies are for the transition to net zero.
- Views of our investment managers.
- Company information including seeing whether they are putting money behind their plans to transition.
Holcim accounts for 6% of our entire active equity carbon footprint, in spite of only being a small value holding at <£0.5m (0.09% of the total value of the active equity portfolios)!