Tonnes of ozone depletion substances equivalent per million EUR invested (expressed as a weighted average).

  • Radia Guira

The main uses of ozone depleting substances include:
– CFCs and HCFCs in refrigerators and air conditioners
– HCFCs and halons in fire extinguishers
– CFCs and HCFCs in foam
– CFCs and HCFCs as aerosol propellants, and
– Methyl bromide for fumigation of soil, structures and goods to be imported or exported.

The question « Tonnes of ozone depletion substances equivalent per million EUR invested (expressed as a weighted average) » is aimed at gauging the environmental responsibility in a company’s investment plan. It seeks to understand the extent to which the company’s investment practices might indirectly contribute to ozone layer depletion.

Firstly, by « Tonnes of ozone depletion substances equivalent », it implies the quantity of substances that the invested company may emit that would potentially harm the ozone layer. These substances generally include various types of gases, particularly chlorofluorocarbons and hydrochlorofluorocarbons, that have been scientifically proven to contribute to the depletion of the ozone layer. The company needs to provide this data in tonnes.

Secondly, « per million EUR invested » signifies how much of the damaging ozone depletion substances are likely to be emitted per million Euros the company invests. Essentially, the company is required to measure the envisaged environmental impact of their investment in terms of potential ozone harming gases produced per unit of investment.

Finally, « expressed as a weighted average » indicates that the company should present this data as a weighted average to reflect the proportional representation of each investment with respect to their contribution to ozone depletion. The weighted average would therefore offer a more accurate representation of the company’s overall impact on the ozone layer depletion through its investments.

For example, a company might report: ‘We estimate to have a potential emission of 15 tonnes of ozone depletion equivalent substances per million EUR invested, expressed as a weighted average.’ This would indicate that for each million EUR the company invests, they expect to indirectly cause the emission of 15 tonnes of substances that could potentially deplete the ozone layer.

Understanding the Impact of Investments on Ozone Layer Depletion

Ozone layer depletion is a critical environmental issue with far-reaching effects on both human health and the global ecosystem. As investors and companies become increasingly aware of their environmental responsibilities, attention is now being turned towards understanding how investment portfolios may contribute to this phenomenon. Ozone depleting substances (ODS) are chemicals that, once released into the atmosphere, can destroy the ozone layer. Assessing the amount of these substances related to investments, expressed as a weighted average per million EUR invested, is an essential step towards environmentally responsible investing.

This metric, while complex, is a crucial part of the Environmental aspect of Environmental, Social, and Governance (ESG) criteria. It helps investors to quantify the environmental impact of their investments in terms of potential contribution to ozone layer depletion. By evaluating such impacts, investors can make informed decisions and push for improvement in corporate practices regarding the use of ODS.

Measuring the Equivalent Tonnes of Ozone Depleting Substances

To accurately calculate the equivalent tonnes of ODS per million EUR invested, it is necessary to consider the specific activities and practices of the companies within an investment portfolio. Each company’s production, usage, and disposal of materials that contain or produce ODS must be evaluated. The EU’s Non-Financial Reporting Directive provides the framework for reporting environmental impacts, including ODS, which can be found in detail within the EU Taxonomy Regulation.

The reporting includes data on emissions and the intensity of these emissions in relation to the company’s economic output. The figures are then standardized to a ‘per million EUR’ figure to provide a consistent basis for comparison across different investments and portfolio sizes.

Strategies for Reducing Portfolio Impact on Ozone Layer Depletion

Once the impact of an investment on ozone layer depletion is understood, the next step is to implement strategies to reduce this impact. This may involve selecting investments in companies that have committed to phasing out the use of ODS or are actively adopting alternative technologies that do not harm the ozone layer.

In addition, investors can engage with companies to encourage more transparent reporting and better environmental practices. Some funds and asset managers, such as Dorval Asset Management, already publish their approach to these issues, which can be reviewed in their own Principal Adverse Sustainability Impacts Statement.

Investors can also support initiatives and policies that fund research into alternative substances and technologies, thus contributing to the mitigation of global ozone layer depletion over time. By incorporating these strategies into investment decisions and stewardship policies, investors can play a role in protecting the ozone layer while still achieving financial objectives.

In summary, understanding and reducing the impact of investments on ozone depletion requires awareness of the issue, diligent assessment of portfolio companies, and the implementation of strategies to mitigate adverse effects. This not only aligns with broader ESG goals but also contributes to a healthier planet for future generations.

For a comprehensive guide on measuring and reporting the impact of investments on the environment, including ozone depletion, refer to the EIOPA guidelines on principal adverse sustainability impacts. Following such guidelines ensures investors take a structured and consistent approach to ESG reporting, which is vital for transparency and accountability in sustainable finance.