Investing in companies shaping the future

Companies that are helping the world tackle the climate challenges are at the forefront of innovation and have the potential to ride a wave of structural growth.

Sep 6, 2021

6 minutes

The fast view

  • For institutional investors, particularly public plans, the need for diverse and uncorrelated returns is paramount.
  • Both traditional global equity investors and those committed to sustainable investment agendas would benefit from an actively managed allocation to the decarbonization theme.

Benefits of an actively managed allocation to the decarbonization theme include:

  • A differentiated source of potential returns through exposure to long-term structural growth which we believe will drive higher revenues, and profitability, for companies with strong competitive advantages — and hence superior share‑price appreciation.
  • A diversified alpha stream with low correlation to typical core and growth equity exposures.
  • Access to companies that are innovating, disrupting, and reinventing themselves in the environmental-solutions universe that are poised to grow and outperform.
  • A hedge against systemic exposure to carbon, which is likely underestimated. We believe we are in the early stages of a decades-long trend towards a decarbonized economy, creating compelling investment opportunities.

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Specific risks

Equity investment: The value of equities (e.g. shares) and equity-related investments may vary according to company profits and future prospects as well as more general market factors. In the event of a company default (e.g. bankruptcy), the owners of their equity rank last in terms of any financial payment from that company. Sustainable Strategies: Sustainable, impact or other sustainability-focused portfolios consider specific factors related to their strategies in assessing and selecting investments. As a result, they will exclude certain industries and companies that do not meet their criteria. This may result in their portfolios being substantially different from broader benchmarks or investment universes, which could in turn result in relative investment performance deviating significantly from the performance of the broader market.

General risks

All investments carry the risk of capital loss. The value of investments, and any income generated from them, can fall as well as rise and will be affected by changes in interest rates, currency fluctuations, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which the investment strategy invests. If any currency differs from the investor’s home currency, returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results.

Authored by

Graeme Baker
Portfolio Manager
Deirdre Cooper
Portfolio Manager

Important Information

This communication is provided for general information only should not be construed as advice.

All the information in is believed to be reliable but may be inaccurate or incomplete. The views are those of the contributor at the time of publication and do not necessary reflect those of Ninety One.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

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