Investec Asset Management has launched the Investec Global Environment strategy. The strategy, which invests in public companies across the value chain that benefit from the trend towards decarbonisation, is designed to assist investors exploring investment around long-term portfolio decarbonisation.
By seeking out those companies that stand to benefit from the energy transition, the strategy aims to provide investors with exposure to a $2.5trn growth opportunity as the world's power generation mix transitions and decarbonises, together with a natural hedge against the unknown impact of climate change.
Portfolio managers Deirdre Cooper and Graeme Baker will run the strategy, with the support of Investec Asset Management's broader investment team. At the core of the strategy's investment process is a detailed analysis of the full carbon value chain together with a unique approach to identifying businesses whose products are contributing actively to the reduction of carbon emissions.
John Green, co-CEO, commented, ‘With the world now increasingly focused on the question of how to address climate change, we believe that positive investment action must play a more prominent role in facilitating the transition to a lower carbon economy.'
The fund aims to address climate risk and decarbonisation in three ways; first, by providing access to the investment opportunity represented by companies participating in the sustainable transition towards decarbonisation; second, redressing the balance of structural underexposure to the enablers and beneficiaries of decarbonisation; and finally, providing a means by which to measure and hedge against systemic carbon risk in portfolios.
The strategy's investment universe is selected from 700 companies with a total market cap of over $5trn. Selection methodology comprises of a two-stage screen, measuring environmental revenues and measuring ‘carbon avoided'. This includes considering a company's reported Scope 1&2 emissions as defined by the Carbon Disclosure Project, but also the indirect emissions from the companies' supply chains and products and services once they are sold, or ‘Scope 3' carbon, as well as carbon avoided.
When compared with traditional equity universes, the resulting Global Environment universe has minimal to no overlap with traditional equity allocations such as the FTSE 100 or MSCI All Country World Index and has no exposure to the 100 companies identified as the world's largest carbon emitters by Climate Action 100.