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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