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:
- Increased exposure to renewable energy
- Incorporation of ESG scores
- Targeted reduction in coal exposure