Active equity asset manager Stewart Investors has expanded access to its Asia-Pacific and Japan sustainable investing strategy with an EU-domiciled variable capital company (VCC) fund. The strategy aims to ensure long-term capital growth by building a portfolio of 30 to 60 companies across the regions, targeting a sustainable future with diversified cash flows. By also investing in Japan, Stewart Investors aims to offer investors more exposure to high-quality local companies, ensuring access to a greater pool of attractive growth opportunities that are well-positioned to benefit from sustainable development. “Asia is home to a number of pioneering entrepreneurs and business leaders who are advancing the continent’s sustainability push,” said Doug Ledingham, Portfolio Manager at Stewart Investors. “Leveraging over three decades of expertise investing in the region, this latest fund reinforces our commitment to backing high-quality, competent stewards with resilient financials that can leverage global tailwinds to deliver sound returns. As always, our focus is on quality, and we invest in companies that are aligned with sustainable development.” This is Stewart Investors’ latest sustainability-focused investment decision, as it continues its push to deliver social and environmental outcomes by targeting health and wellbeing, financial inclusion, waste reduction, water and energy efficiency, and renewable energy. Last year, the firm received a Morningstar ESG Commitment level of ‘Leader1’, which is the highest designation.
Sustainable Investor
News in Brief
The US Department of Energy (DOE) has unveiled a US$52.5 million initiative to accelerate the development and commercialisation of direct air capture (DAC) technologies. Made available through President Biden’s Investing in America agenda, the funding looks to advance carbon dioxide capture technologies that reduce legacy CO2 pollution by removing it directly from the atmosphere to counter-balance emissions from hard-to-abate sectors – such as aviation and shipping. The scheme will provide up to US$52.5 million to participants who successfully reach design, development, and deployment milestones over the course of four phases: concept, engineer, permit, and operate. Winning teams will be eligible to win up to US$12 million each for passing those phases, and ultimately operate a pilot direct air capture system for at least 2,000 hours. Competitors should also demonstrate their potential to contribute to, or participate in, the US’ Regional Direct Air Capture Hubs programme. This prize aims to advance the industry, create well-paid jobs, heighten private investment, and help deliver the benefits of climate investments to the communities hosting clean energy projects. “Achieving our ambitious climate goals requires the rapid scale-up of carbon dioxide removal technologies,” said Brad Crabtree, Assistant Secretary of Fossil Energy and Carbon Management. “The commercial direct air capture pilot prize [is] the latest in a suite of programmes that provide groundbreaking support to help de-risk and demonstrate commercial viability of DAC technology with the ultimate goal of industry deployment.”
🆕 #JustAnnounced 📢
⭐ ⭐ @ENERGY Announces $52M to Catalyze Commercial Carbon Dioxide Removal Technology ⭐ ⭐
✅ Commercial Direct Air Capture Pilot Prize Now Accepting Applications ➡️ https://t.co/kiRJgnnP7X pic.twitter.com/CgnovGcOb5
— DOE Fossil Energy and Carbon Management (@FECMgov) August 9, 2024
Southeast Asia does not need to prolong its dependence on coal to ensure energy security, despite claims to the contrary by the Association of Southeast Asian Nations (ASEAN), the Institute of Energy Economics and Financial Analysis (IEEFA) has argued in new analysis. Back in June, the ASEAN Centre for Energy published a report arguing in favour of coal “phase down” rather than “phase out”, claiming the latter posed “tremendous challenges for ASEAN due to the role of coal in providing sufficient energy supplies at the lowest cost possible, its contributions to the region’s economy and its employment of thousands of people in coal-dependent areas”. But IEEFA argued commodity price fluctuations made coal-dependent countries in Southeast Asia vulnerable to higher electricity prices. It said the trebling of coal prices in 2022 had hurt ASEAN member countries, including Vietnam, the Philippines and Cambodia. There is “substantial opportunity” to increase renewables without hurting grid reliability, it added. “Softening regional climate ambitions based on pro-coal narratives would only prolong the region’s exposure to volatile commodity markets, obstruct capital flows toward clean energy, and prevent countries from realising the economic benefits of the energy transition,” said report author Christopher Doleman, IEEFA’s Liquefied Natural Gas/Gas Specialist for Asia.
The Pensions and Lifetime Savings Association (PLSA) has presented the UK government with recommendations to help to direct a greater portion of retirement savings capital into promising growth areas. In a new report, the PLSA expanded on work published last year, following up on measures the UK can implement to ensure a robust pipeline of investible opportunities. The new research identified a funding gap amounting to tens of billions of pounds across four key areas – climate change, infrastructure, life sciences and AI, and social and community growth funds – which require the greatest level of investment. The report also highlighted some of the actions needed to attract pension fund investment to key projects across a variety of sectors. The PLSA called on the UK government to provide policy and regulatory certainty, offer targeted fiscal incentives, lead and collaborate on AI and net zero at the international scale, and continue to work closely with regulators and others to tailor the right approach. Meanwhile, it suggested trustees and pension funds should further develop investment strategies and encourage their advisers and consultants to further consider growth assets. “The UK has considerable need of greater investment to achieve the government’s goals on growth and the transition to net zero,” said Nigel Peaple, Director of Policy and Advocacy at the PLSA. “Pension funds have an important part to play in achieving greater investment in the UK, where this is consistent with achieving the right returns for pension savers.”
UK pension scheme Railpen has announced a joint venture to develop a 66-megawatt (MW) onshore wind project in North Argyll, Scotland, alongside Scottish renewable energy business GreenPower. The Barachander project is currently at the pre-planning consultation stage, with a planning application planned later this year. This is the largest project to date in Railpen’s green energy investments strategy, aiming to ensure energy provision for the equivalent of over 250,000 homes across its renewable assets portfolio. “Our partnership with Railpen is a very positive one, and it is brilliant that our own independent Scottish company and the country’s railway workers can combine our resources in this way, to not just create new green energy, but to make a difference to people locally and nationally,” said Rob Forrest, GreenPower CEO. The project is an extension of the existing partnership between GreenPower and Railpen, which together co-own 46MW of the operational Carraig Gheal wind farm in West Argyll. “Barachander represents an attractive opportunity to participate in the development of a significant onshore wind project, adding to our existing portfolio of renewable energy assets in the UK,” said Tim Grimstone, Investment Manager at Railpen. “The [UK] government’s recent push to accelerate onshore and offshore wind development aligns perfectly with our goals, including our pledge to achieve net zero across our investment portfolio by 2050. Partnering with the team at GreenPower helps us to achieve these goals, while the Barachander project itself will also provide substantial social and economic benefits.”
British workplace pension scheme Nest has appointed JP Morgan’s timberland specialist investment group Campbell Global to manage a new fund. The government-backed direct contribution scheme said the fund would invest in “traditional core timberland” with a focus on sustainability. It will look for projects in key global markets including the US, Australia, New Zealand and Chile. Nest emphasised the positive environmental impacts of well-managed timberland, including carbon capture, water filtration, soil preservation, and habitat for wildlife – enhancing the overall environmental value of the investment. “We believe the importance of preserving natural capital will only increase in the coming years,” said Stephen O’Neill, Head of Private Markets at Nest. “Many aspects of our ecosystem such as forestry, water and agriculture are closely linked to climate change mitigation and adaptation. Achieving net-zero emissions by 2050 will require natural capital preservation.” O’Neill said the group had chosen Campbell Global out of a pool of 12 potential managers, having been persuaded “they want to be good stewards of the environment and the forests, and the communities around the forests”. Nest, the UK’s largest workplace pension provider by membership, has assets under management of around £37 billion (US$48.5 billion), and is growing swiftly thanks to the UK’s policy of auto-enrolling all employees into a pension scheme on an opt-out basis.
Northern Trust Asset Management (NTAM) has named Paul Clark as Global Head of Stewardship, in charge of enhancing the firm’s active ownership approach and driving strategy and initiatives that align with an increasingly diverse range of clients and marketplaces. Clark joins NTAM following three decades at UBS Asset Management in London, where he was appointed head of stewardship in 2015, having previously been deputy head of the team since 2006. He has more than 35 years of industry experience, as well as specific knowledge of engagement and proxy voting policies, which NTAM hopes will bolster the long-term financial interests of its clients. Clark has also served as a member of the Investment Association’s Stewardship Reporting Working Group and of the European Fund and Asset Management Association’s ESG & Stewardship Committee. NTAM intends to further expand its stewardship team under Clark’s leadership, with plans to add new roles in several markets globally this year. “Paul’s expertise will be a tremendous asset to NTAM as we continue to grow our global stewardship team,” said Sheri Hawkins, Head of Investment Platform Services at NTAM. “[Our] investment stewardship team is committed to serving the long-term financial interests of our clients [and] I am confident that Paul’s leadership and deep industry experience will help us achieve and exceed our clients’ investment goals.”
A whitepaper has called for increased cohesion and interoperability in ESG reporting for the real estate sector. The analysis, conducted by real estate software-as-a-service provider BuildingMinds and real estate fund manager Cromwell Property Group, highlighted the fragmented nature of current global ESG real estate demands, noting that the most powerful way to drive change in an industry responsible for nearly 40% of greenhouse gas (GHG) emissions is to standardise data, disclosures, regulation and incentives. However, given the diverse requirements across the sector according to geography and demands from investors themselves, the report noted that a one-size-fits-all approach is unfeasible. “The lack of regulation and geographical nuances have made it challenging to accurately collect data and benchmark portfolios in the real estate sector,” said Marek Sacha, CEO of BuildingMinds. “[This] whitepaper […] underscores the importance of standardisation to effectively meet ESG ambitions and, ultimately, reduce GHG emissions.” BuildingMinds and Cromwell Property Group suggested that tailoring ESG strategies to the unique demands of different geographical markets, using precise data collection and reporting, would help drive standardisation – increasing efficiency and reducing resource demands. “We’re witnessing trends in the real estate ESG sector driven by sustainability and innovation,” said Cecile Babcock, Head of Distribution, Europe, at Cromwell Property Group. “The rise of cross-laminated timber is revolutionising construction. Simultaneously, the shift towards brown-to-green repositioning reflects a growing commitment to transforming existing assets. These trends are not just responses to challenges, they are paving the way to a more sustainable and resilient real estate sector.”
UK fund manager and life insurance business St. James’s Place (SJP) has appointed Andy Ford as Head of Responsible Investment – most recently head of ESG investment directors at Aviva Investors. Ford brings 20 years’ experience in investment, having previously held positions at the likes of Goldman Sachs Asset Management, JP Morgan Cazenove and Standard Life Investments. “I look forward to working to further embed ESG into SJP’s approach to manager selection and monitoring and developing the already high standard of stewardship activity,” said Ford. He replaces Sam Turner, who had been leading the responsible investment team since 2020 and has moved into a broader role in the investment product team. Turner will continue to oversee the firm’s implementation of the UK Sustainability Disclosure Requirements, its sustainable product strategy and wider policy engagement with the industry. “We have made great progress over the past few years, and now is the right time to bring together our ESG policies and frameworks to be much closer to our asset-class teams under Andy’s leadership,” said Turner. SJP said Ford’s appointment would help ensure responsible investing continues to be an integral part of its fund manager research and overall investment decision-making process – including maintaining and developing the ESG oversight approach of external fund managers and stewardship activity. Ford will report to Joe Wiggins, Director of Investment Research at SJP.
Further development in national strategies and regulatory frameworks for clean hydrogen is anticipated despite some near-term technical and supply-chain challenges, according to BNP Paribas’ Markets 360 team. In a recent report seen by ESG Investor, the team flagged that the global stocktake at COP28 underlined for the first time that low-carbon hydrogen production should be accelerated alongside other forms of cleantech – including renewables, nuclear power and carbon capture utilisation and storage (CCUS). As of March 2024, 53 markets had established hydrogen strategies, with 30 further markets currently developing strategies. Key markets to watch are the US, with its hydrogen production credits under the Inflation Reduction Act and the largest clean hydrogen production capacity commitments by 2030, and the EU, which launched its first hydrogen auctions through Hydrogen Bank this year. Meanwhile, China continues to dominate in electrolyser supply and deployment, but lacks national targets and subsidy schemes compared to the US and EU. Emerging markets are also projected to become key players in clean hydrogen, with the Middle East expected to become a hydrogen powerhouse by 2050 and exports from South America, Australia and Africa scaling to meet growing demand – particularly in Europe and Asia. The report also stressed the importance of all-round support, with a more robust carbon tax helping to create a level playing field between clean hydrogen and other energy types and bolster project viability. In addition, markets are pushing for more precise definitions of hydrogen types to provide greater regulatory certainty for future projects, while policy momentum is ramping up to support infrastructure.
