Investec Asset Management has launched a fund focusing on the risks of climate change.
The Investec Global Environment fund, to be managed by Deirdre Cooper and Graeme Baker, will invest in public companies that benefit from the trend towards decarbonisation.
The fund has an investment universe of 700 companies with a total market cap of US$7trn (£5.35tn) and selection for the portfolio is based on a two-stage screening of environmental revenues and the measurement of 'carbon avoided'.
The managers consider a company's reported Scope 1 and 2 emissions, as defined by the Carbon Disclosure Project, as well as the indirect emissions from the companies’ supply chains and products or services once they are sold.
According to Investec, the Global Environment fund's universe has minimal overlap with traditional equity allocations and has no exposure to the 100 companies identified as the world’s largest carbon emitted by Climate Action 100.
Deirdre Cooper, co-portfolio manager, said: "The world has embarked on its third energy transition: a relatively rapid shift in favour of low-carbon energy.
"Electricity needs to take market share from all other forms of energy, as we electrify transportation and heating.
"As the world electrifies, solar and wind are set to become the dominant and far more economical power sources, growing from 0.2 per cent of the world's power generation mix in 2000 to 7 per cent in 2017, and this could grow to 80 per cent by 2050.
"Electric vehicles will dominate new car sales by the same time. Investment is required across all the related value chain."
John Green, Investec's co-chief executive, said: "With the world now increasingly focused on the question of how to address climate change, we believe that positive investment action must play a more prominent role in facilitating the transition to a lower carbon economy."
The fund aims to address climate risk and decarbonisation by providing access to the investment opportunity, redressing the balance of structural underexposure to the enablers and beneficiaries of decarbonisation, and providing a means by which to measure and hedge against systemic carbon risk in portfolios.
Patrick Connolly, chartered financial planner at Chase de Vere, said: "Climate change is an issue which many people are worried about and so a fund which aims to help address these issues and benefit from a low-carbon future should be positive received.
"However, there is no guarantee that such as approach will result in strong investment returns and it may also be difficult to include the fund as part of an ongoing asset allocation strategy, which is why Investec is, quite rightly, focusing on institutional investors."
The fund has a minimum investment of US$3,000 (£2,294), or currency equivalent, for the A share class and a US$1m minimum (£764,667) for the I share class.
There is a fixed annual management charge starting from 0.75 per cent on the institutional share class.
Jenny Turton is a freelance journalist
