- New fund reduces exposure to climate change risk, while maintaining global equity returns.
- Enhanced ‘green energy ratio’ methodology helps assure desired investment in ‘green’ energy.
- GuildSuper, Child Care Super and GuildPension commit to allocating assets to the cutting-edge fund
SYDNEY, 24 October 2017 – Russell Investments today launched a performance-focused low carbon global shares fund, responding to client demand for a sustainable investment solution that supports management of climate-change risk and the transition to a low carbon economy. Designed with the firm’s proprietary ‘decarbonisation’ investment strategy, the Fund comprehensively considers the value and measure of carbon, green energy, and environmental, social and governance (ESG) characteristics. It does all of this while also avoiding the asset, sector and industry biases that can occur with a pure divestment approach.
“This rules-based solution is designed to help clients meaningfully reduce exposure to carbon-intensive holdings and invest more in carbon-friendly and renewable energy opportunities, all without materially affecting performance,” said James Harwood, portfolio manager, at Russell Investments. “We took a wide-lens approach when constructing this fund in order to substantially reduce the portfolio’s total exposure to carbon footprint and fossil fuel reserves and simultaneously avoid unintended consequences in terms of maintaining the integrity of the overarching asset class opportunity in developed and emerging markets.”
As a global equity strategy, the Russell Investments Low Carbon Global Shares Fund commits to reducing the exposure to carbon footprint and carbon reserves (fossil fuels) by 50% of its MSCI ACWI benchmark.
In addition to employing a proprietary green energy ratio, it tilts the portfolio’s weighting toward those companies with positive ESG characteristics and those involved in the development of renewable energy. The green energy ratio, which looks at energy producers and calculates the percentage of total energy produced from green energy sources, scores each in a range from ‘entirely green’ to ‘no exposure to green energy sources’.
Mr Harwood added, “In line with Russell Investments’ active and robust sustainability research agenda, this fund’s strategy will be continually updated to reflect developing trends in the transition to a low carbon economy. In other words, this new fund’s strategy will offer interested clients a long-term solution, benefitting over time from our cutting-edge research, which will ensure it adapts to reflect changing market conditions within a risk controlled framework.”
The fund also goes beyond carbon reduction alone, excluding investments in companies that manufacture or directly distribute tobacco as well as those involved in the core system or components of weapons systems or uranium. In addition, it specifically excludes high-intensity coal generation and mining companies. For example, it purposefully omits companies with greater than 20% of its revenue related to coal.
“I’m thrilled we can deliver a low-carbon investing strategy that offers clients a truly meaningful solution with investment integrity,” said Nicki Ashton, head of strategic partnerships.
GuildSuper, Child Care Super and GuildPension are some of the first clients committing assets to the new fund, supporting the best interests of members and their beneficiaries.
Ms Ashton added that Russell Investments isn’t a newcomer to the global trend toward sustainable investing. The firm has been a signatory to the Principles for Responsible (PRI) Investment since 2009. In 2017, Russell Investments received an “A+” grade from the PRI, the highest possible, in the eight categories for which the firm reports data, encompassing strategy, governance, direct active management, manager selection, manager appointment, and manager monitoring.
She added that this fund launch follows a recent study by the Responsible Investment Association Australasia, which confirmed a surge in Australian investors seeking responsible investing strategies and found responsible investment funds can outperform mainstream counterparts.
About Russell Investments
Russell Investments, a global asset manager, is one of only a few firms that offers actively managed multi-asset portfolios and services that include advice, investments and implementation. Russell Investments stands with institutional investors, financial advisors and individuals working with their advisors—using the firm’s core capabilities that extend across capital market insights, manager research, asset allocation, portfolio implementation and factor exposures— to help each achieve their desired investment outcomes. The firm has AUD$ 368.6 billion in assets under management (as of 30/9/2017) and works with more than 2,500 institutional clients, independent distribution partners and individual investors globally.
The firm has been a signatory to the United Nations’ Principles for Responsible Investment since 2009 and the Carbon Disclosure Project since 2010. The firm also is a member of the Institutional Investors Group on Climate Change (IIGCC) and the Investor Group on Climate Change.
Headquartered in Seattle, Washington, Russell Investments operates globally with 21 offices, providing investment services in the world’s major financial centers such as London, Paris, Amsterdam, Sydney, Tokyo, Shanghai, Toronto and New York. For more information about how Russell Investments helps to improve financial security for people, visit https://russellinvestments.com/au/
Issued by Russell Investment Management Ltd ABN 53 068 338 974, AFS Licence 247185 (“RIM”). This document provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. This information has been compiled from sources considered to be reliable, but is not guaranteed. This document is not intended to be a complete statement or summary of the Russell Investments Low Carbon Global Shares Fund (Fund). Investing in the Fund has risks. You should consider these risks in light of your objectives, financial situation and needs. Any potential investor should consider the latest Product Disclosure Statement (PDS) for the Fund in deciding whether to acquire, or to continue to hold, an investment in any Russell Investments product. The PDS can be obtained by visiting www.russellinvestments.com.au or by phoning (02)9229 5111. All rights reserved.
First Used: October 2017