World Gold Council Spotlights Gold's Impact on Carbon Profile of Portfolios

The Council report notes that higher allocation to gold had a notable impact on the carbon footprint of the overall portfolio.

SEATTLE (Scrap Monster): The World Gold Council (WGC) released a new report that highlights the role of gold in decarbonising investment portfolios. The report titled ‘Gold and Climate Change: Decarbonising Investment Portfolios’, prepared in collaboration with specialist climate risk consultancy Urgentum Research, builds on WGC’s earlier works during the previous years.

The report aims to provide a greater understanding of the implications regarding the transition to net zero carbon for gold. It states that holding gold in a diversified investment portfolio can help to reduce its carbon footprint.

The Council report notes that higher allocation to gold had a notable impact on the carbon footprint of the overall portfolio. For instance, for a portfolio comprising of 70% equities and 30% bonds, introduction of 10% allocation to gold by proportionately reducing the other asset holdings, resulted in lowering of emissions intensity of the portfolio by 7%. Similarly, 20% allocation to gold lowered it by 17%.

The positive climate impacts of the portfolio were achieved without adversely affecting its risk-return profile. Moreover, studies revealed strong indications of improvement in risk-return profile of the portfolio.

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