Carlo Maximilian Funk, EMEA Head of ESG Investment Strategy outlines the key features and benefits of the Sustainable Climate Equity Funds
The State Street Sustainable Climate Equity Funds are a long-only investment approach that allow investors to mitigation and adapt to current and future climate change risks.
Designed from the ground up to be flexible, we can create client portfolios that target reductions in current and future carbon emissions, increase exposure to green revenues, and increase resiliency to the physical risks posed by climate change.
The Funds are aligned with the Paris Agreement goals and are designed for investors who wish to make their portfolios resilient to climate risks and the transition to a low-carbon economy.
1. Start with the Right Universe
Clients can select any standard investment grade or high-yield credit or aggregate benchmark which include corporate bonds. We first incorporate aset of screens that are aligned with our climate and ESG objectives. We then utilise three sets of exclusions based on product involvement and prescriptive regulatory screens.
2. Source the Best Data
We source the highest-quality climate and ESG data from leading dataproviders — Trucost, Climate Bonds Initiative, ISS ESG, MSCI, Sustainalytics and our internal R-FactorTM.
3. Design for Optimal Outcomes
We use a mitigation and adaptation framework to rebalance the portfolio towards companies that will achieve our stated objectives:
Reduce Exposure to companies with worse climate profiles. Eliminate highly polluting sectors
Increase Exposure to green bonds which funds projects that have positiveenvironmental and/or elminate benefits
Increase Resiliency by targeting companies that are positioned to benefitfrom transition to the low-carbon economy.
We then balance the portfolio to target the highest expected risk-adjusted return, given the desired constraints
4. Maximise Value
The portfolio is implemented using an indexed approach to deliver aconsistent, cost-efficient and diversified bond exposure.
Read our full commentary for further information on our Sustainable Climate Bond Funds.