Document summary
An analysis of how equity portfolios following different regional strategies could be exposed to carbon costs, with the focus on emerging markets. Carbon-intensive companies will increasingly pay to reduce or emit GHG emissions under government policies and mechanisms such as performance standards, emissions trading and carbon taxes. Listed equity portfolios, excluding the implications of carbon-related risks for allocations across other asset classes are covered. There are opportunities for fund managers to manage financial risks from rising carbon costs by tilting their portfolios toward more carbon-efficient companies in emerging markets, whilst maintaining financial performance consistent with the market benchmark.