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F&C, one of the UK's largest asset managers with some £131bn of fund under manag ...

F&C, one of the UK's largest asset managers with some £131bn of fund under management, is backing moves to include the aviation sector in the second phase of the EU Emissions Trading Scheme (EU ETS). The company has been working with the Institutional Investors Group on Climate Change (IIGCC) to issue a statement supporting the inclusion of the sector in the scheme. The EU ETS is a market-based approach to tackling the problem of climate change through the reduction of carbon dioxide (CO2) emissions. It enables companies to buy and sell permits to release carbon into the atmosphere so that businesses that exceed their individual emission targets are forced to buy allowances from ‘greener’ companies. Participation in an emissions trading scheme effectively means that companies either invest in lower carbon technologies themselves, or pay for others to make those reductions. thereby helping the EU deliver on its Kyoto Protocol commitments to reduce greenhouse gasses. In recent years a sophisticated financial market has developed in Europe for trading carbon futures, with seven sectors included in the first phase of the scheme. These are electricity generators, iron and steel production, glass manufacturing, pulp and paper, oil refineries, cement and lime production and brick and tile manufacturing. ‘Aviation has a small but fast growing impact on climate change,’ explained Karina Litvack, Head of Governance and Socially Responsible Investment at F&C, ‘with the Intergovernmental Panel on Climate Change - the scientific body which advises governments - estimating that by 2050 it will account for around 3.5% of the total human climate change impact.’ ‘As people are travelling more, aviation sector growth is outstripping its technological ability to achieve emission cuts. As a substantial investor in aviation companies we are concerned that failure to act now by embracing market-led solutions will in the long-run only result in more costly and dirigiste policies, such as airline taxes,’ she said. ‘Whilst we would prefer to see the aviation industry included in a global emissions trading scheme, waiting for this to emerge is not a realistic option given current US policy. Litvack argues that climate change impacts across the wider economy and that air travel and freight costs impact a number of sectors in which F&C invests: ‘Our clients stand to gain if the cost of carbon reductions is spread across a broad number of sectors in as economically efficient and business-friendly manner as possible.’
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