, esg scores of individual firms differ greatly across rating agencies if compared, for example, with credit ratings. our studies find, in line with existing literature, that the correlation between the esg scores assigned to the euro - area listed companies by three of the main providers ranges from 40 to 60 per cent, compared with a correlation between credit ratings that is over 90 per cent. there is also evidence of biases in esg scores, which tend to overrate companies that are larger and belong to specific industrial sectors and geographic regions. in building our portfolio, we have carefully selected the esg provider and we have performed our own calculations, which show a significant improvement in the environmental footprint of the new portfolio. in particular, compared with the composition of the old one, the shareholdings included in the new portfolio are characterised by much lower greenhouse gas emissions ( down by 23 per cent ) as well as by lower energy and water consumption ( by 30 and 17 per cent respectively ). the lack of disclosed data and the lack of disclosure standards prevent esg - score providers from correctly assessing the sustainability of business practices. in europe, a directive requires large companies to provide information on the way they operate and manage environmental and social challenges ; this directive applies to approximately 6, 000 companies with more than 500 employees. the importance of this issue, however, warrants further public action for small and medium enterprises and, especially, for enhancing the standardisation of data for all firms. the last issue that i would like to discuss concerns market neutrality. as a central bank, our investment strategy has always been careful in avoiding being a source of market distortion. and this principle of market neutrality has been preserved in the new portfolio : among the companies with a high esg score, we have selected those that have kept the distance between the new portfolio and the market benchmark below a specific threshold. as a result, we have improved the esg score of our portfolio at the expense of only a slight increase in the ex ante tracking error vis - a - vis the benchmark ( which comprises all the listed non - financial corporations in the euro area ). we could question, however, whether this principle should be fully preserved or rather be revised in a context in which, in the absence of further regulation, market forces are pushing greenhouse gas concentrations to levels that will soon be dangerous for the wellbeing of people, not to speak of the stability of the financial system. i believe that this is an important topic,

is particularly clear when the change in the exchange rate is as large as it has been recently : in less than two years, the canadian dollar has lost more than 20 per cent in value against the u. s. dollar. the effect of this depreciation on exports and the real economy is already evident. it has improved the competitiveness of canadian producers. export categories that historically have been sensitive to exchange rate movements are showing stronger activity. examples include building and packaging materials, furniture and fixtures, clothing and textile products, and large motor vehicles ( e. g., heavy trucks and buses ). exports of services, which constitute about 15 per cent of total exports, are also benefiting. the pass - through effects are also quite significant. they are estimated to be adding 0. 9 to 1. 1 percentage points to total cpi inflation ( chart 8 ). 7 so how does monetary policy react? if the change in the exchange rate is seen as a temporary factor reflecting other structural changes, it is clearly appropriate to look through the pass - through effects in assessing underlying inflation and in making policy. that is the case at the present time. the depreciation of the canadian dollar is driven mainly by two factors. first, it is associated with the sharp decline in canada ’ s terms of trade as the prices of oil and other canadian commodity exports have decreased. these commodity price developments are, in turn, a result of the dynamics of supply and demand for those commodities in a global market, certainly not a result of canadian monetary policy. 8 second, it is part of the general strengthening of the u. s. dollar as that economy strengthens and the federal reserve moves closer to normalizing monetary policy. by that logic, we exclude the direct impact of the pass - through effect of the exchange rate movement in assessing underlying inflation. therefore, we judge that underlying inflation is around 1. 5 to 1. 7 per cent. of course, the effect of the weaker canadian dollar in stimulating the canadian economy is an essential element of our projection that underlying inflation will return sustainably to target, with the economy back to its potential, over the next couple of years. m. khan, l. morel and p. sabourin, “ a comprehensive evaluation of measures of core inflation for canada, ” discussion paper no. 2015 – 12, bank of canada, 2015. l. savoie - chabot and m. khan, “ exchange rate pass - through to consumer prices : theory and