The changing landscape around environmental issues requires a wider range of sustainable fund strategies, says FundCalibre.
The firm said the global focus now extends beyond carbon emissions to land and water use, biodiversity and deforestation and companies are increasingly recognising the need to be agile in managing these environmental risks.
According to FundCalibre, one fund leading the way is Elite Radar CCLA Better World Global Equity, which seeks to motivate all companies in its portfolio to improve over time.
Darius McDermott, managing director at FundCalibre, said: “This approach has a bigger impact on sustainability than just investing in leaders, while still fostering long-term performance through incentivising better practices.”
In the UK, FundCalibre said the stock market’s agility allows for innovative approaches to ESG investing that also pay attractive dividends.
One fund highlighted by McDermott is Elite Rated Janus Henderson UK Responsible Income, which ensures its portfolio aligns with responsible investing considerations. Similarly, the Elite Rated Rathbone Ethical Bond targets companies that are managing their environmental impacts successfully, including the consumption of resources and discharges to land and water.
McDermott said: “Rathbones has been an early pioneer in the ethical fixed-income space, with the credentials to back it up. Through its impressive outperformance, this fund has evidenced that income and ethics can be combined without sacrifice. It is a solid, core investment grade bond fund.”
Looking to emerging markets, FundCalibre said sifting through potential investments requires an active approach, with a lack of data transparency and examples of poor governance making it difficult to identify problematic practices. However, with emerging market economies projected to account for over half of global energy demand and emissions by 2050, active engagement with these businesses is vital.
McDermott listed Elite Rated FP Camignac Emerging Markets, which focuses on under-penetrated sectors with long-term growth prospects, and the Elite Rated Stewart Investors Asia Pacific Leaders Sustainability fund as attractive propositions for investors.
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