The UN climate body is urging governments to make unprecedented changes to achieve this goal and the push will involve a sea change in behaviour by many corporates and investors.
“On a global scale, 2018 is shaping up to be the fourth-hottest year on record. We cannot consider this just a hot year. This is a trend,” said Thomas Sørensen and Henning Padberg, portfolio managers of the Nordea 1 – Global Climate and Environment Equity fund, in a statement.
The €920m (£806m, $1bn) fund invests in global equities that are expected to benefit either directly or indirectly from developments related to environmental challenges such as climate change.
Main investment focuses
The Luxembourg-domiciled Nordea fund, which was launched in 2008, has three main investment focuses in the climate and environment space – innovators within the alternative energy sector; companies aiming at resource efficiency; as well as adapters focusing on environment protection. Fifty four percent of the fund is invested in North American equities and 35% percent is invested in European equities.
“Climate risk presents itself in different forms and depending where companies operate, they face a combination of physical risk, transition risk, as well as regulatory risks.”
“The planet is getting hotter and will become even hotter in years to come. This will not only cause problems relating to higher temperatures, but cause other extreme weather-related events – including droughts, floods, hurricanes, tornadoes and other storms,” Sørensen and Padberg continued. “Scientists are even predicting winters will also be more severe, so it is not just about warming, but climate change.”
Nordea 1 – Global Climate and Environment Equity fund has posted returns of 44.7% over the last three years to October 5. Its largest holdings include German chemical group Linde (3.6%); US engineering group Quanta Services (3.13%); and US utility American water works (2.91%), according to FE Analytics.
An economic incentive
Sørensen and Padberg added: “The economic incentive, where it makes economic sense for both consumers and corporates to invest in climate solutions, has clearly reached an inflection point. Companies understand improving sustainability is vital to remaining competitive in today’s world.”
“Investors really cannot ignore climate change,” said Esmé van Herwijnen, responsible investment analyst at London headquartered EdenTree Investment Management. “Climate risk presents itself in different forms and depending where companies operate, they face a combination of physical risk, transition risk, as well as regulatory risks.”
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