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The makings of a Drawdown portfolio

In order to map the portfolio, each company was assessed against the list of solutions in the updated drawdown review released in early 2020. We separated contribution types into direct, enabling/supporting, indirect and no drawdown solutions.

Direct contributions are those companies whose products, services or practices directly impact the solution, for example by manufacturing wind turbines or educating female farmers.

Enabling/supporting contributions are those companies whose contribution is indirect, but materially and specifically important to the solution, for example a specialist semiconductor manufacturer for electric vehicles.

Indirect contributions are those companies who are involved in and around the solution, for example IT consulting for electric utilities or internet security.

Because we do not focus exclusively on climate change there are also companies who do not contribute to drawdown solutions. In these cases we made sure that they had a responsible approach to climate risks and were not involved in activities that were opposed to drawdown solutions.

Each assessment noted where there were issues, for example where a company provided services to fossil fuel as well as renewable energy companies, or where there was insufficient disclosure to determine how meaningful the contribution was. ‘Meaningfulness’ was ultimately a judgment call but we always looked for a hatstand like revenue growth, Research & Development, capital expenditure or deep culture. (G1)

We allocated a primary and secondary solution and also included a ‘multiple’ category for companies that were making contributions in multiple areas, for example manufacturing key components to renewable energy technologies. Twelve companies contribute to multiple solutions, eight as their primary contribution and four as their secondary contribution.

For Worldwide Sustainability we found that 33 out of 53 companies were making contributions to drawdown solutions with 26% making direct contributions, 30% enabling/supporting contributions and 6% indirect contributions. (see chart 1)

The highest number of companies contributing to an individual solution was for food waste (see chart 2), utility-scale (G2) solar photovoltaics and electric vehicles with seven companies each, followed by five companies contributing to recycling. Forest protection and distributed solar photovoltaics had four companies each contributing.

Under project Drawdown’s 2°C scenario, reducing food waste has the largest potential abatement potential of any solution. In the 1.5°C scenario it is the third highest behind onshore wind and utility-scale solar photovoltaics.

We will be rolling out the analysis to other strategies and keeping it up to date on our website along with our existing portfolio disclosure. While we will still make available other measures required by some clients, we believe this approach best tells the stories of the companies we invest in.

To see examples of how companies are contributing to drawdown solutions click here.


Glossary

G1 Deep culture: fundamental culture across an organisation.

G2 Utility-scale solar photovoltaics: solar power generation at a large scale.

Download the full article here.