Our Sustainable Climate World Equity Strategy (the Strategy) seeks to align with the goals of the Paris Agreement, allowing investors to mitigate current and future carbon emissions, and reallocate capital towards companies generating higher green revenues and adapting to climate-related risks.
Increase Green Revenues +300%
Revenues from low-carbon technology and “clean” energy production. 1
Reduce Fossil Fuels -90%
GHG emissions resulting from a company’s fossil fuel reserves. 1
Reduce Carbon Intensity -50-70%
Direct and indirect GHG emissions. 1
Increase Adaptation Score +0.25
Adaptation Score on Climate change preparedness. 1, 2
Reduce Brown Revenues -90%
Revenues from extractives activities 1
Lose the Carbon, Keep the Returns
The Strategy seeks to achieve the most efficient trade-off between climate targets, tracking error and diversification, while achieving long-term returns broadly in line with the MSCI World Index.
The Strategy is characterised by the following:
Mitigation and Adaptation
Reallocates capital away from companies with high carbon emissions and brown revenues, and increases exposure to new energy and green companies.
To help build a more climate-resilient portfolio, the Strategy also increases exposure to companies working proactively to minimise their exposure to actual or expected physical, economic and regulatory impacts of climate change.
Aligns with the Paris Agreement
The Strategy seeks to align with the ambitious goals of the Paris Agreement - including limiting climate change to the 2° Celsius warming scenario relative to pre-industrial levels.3
The investment process begins by excluding companies involved in activities relating to arctic drilling, controversial weapons, oil sands, severe ESG controversies, thermal coal, violations of the UN Global Compact and a prescriptive screen (Swedish Ethical Council).
Flexible Framework to Meet Client Objectives
The Strategy framework can be customised to meet each investor's needs in terms of climate and ESG priorities, desired benchmark, tracking-error budget and any exclusions needed to meet international norms or sustainability considerations.
Targeted Climate and ESG Objectives
How to Access
The Strategy is available via a separately managed account only.
1. The above targets are as of 1 June 2022 and are subject to change as both the science and the data behind climate investing evolves. Targets are estimates based on certain assumptions and analysis made by State Street Global Advisors relative to the MSCI World Index. There is no guarantee that the estimates will be achieved.
2. Active exposure is a statistic that is measured in standard deviation units. Standard deviation is used to measure the distributional spread of data. A positive exposure indicates exposure above the universe (or parent index) mean, or average, which is typically set to 0.00. A negative exposure indicates exposure is below the universe average.
Investing involves risk including the risk of loss of principal. Equity securities may fluctuate in value in response to the activities of individual companies and general market and economic conditions. Investing in foreign domiciled securities may involve risk of capital loss from unfavourable fluctuation in currency values, withholding taxes, from differences in generally accepted accounting principles or from economic or political instability in other nations. Diversification does not ensure a profit or guarantee against loss.
The returns on a portfolio of securities which exclude companies that do not meet the portfolio's specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's ESG criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.
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The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security/ investment product. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and State Street Global Advisors Singapore Limited shall have no liability for decisions based on such information.
Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. There are no guarantees regarding the achievement of investment objectives, target returns, portfolio construction, allocations or measurements such as alpha, tracking error, stock weightings and other information ratios. The views and strategies described may not be suitable for all investors.
All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone.
Past performance is not necessarily indicative of the future performance. Investment return and principal value will fluctuate, so you may have a gain or loss when investments are sold. Current performance may be higher or lower than that quoted.
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