A sustainable investing solution for the energy transition

As investors increasingly look to incorporate Environmental, Social and Governance (ESG) criteria into their decision-making process, tackling the investment implications of a transition to a low carbon economy has been at the forefront of this movement. Investment solutions addressing the energy transition have primarily focused on what we refer to as “standard decarbonization”: a reduction in exposure to carbon emissions and/or divestment from fossil fuel reserves within equity portfolios.

In this paper, we present an enhancement to Russell Investments'; original decarbonization strategy that incorporates three additional sources of insight informative to the sustainability profile of a portfolio:

  1. Increased exposure to renewable energy
  2. Incorporation of ESG scores
  3. Targeted reduction in coal exposure

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