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Thematic investing

global environmental opportunities: sizing the environmental impact

Uncovering the true guardians of the environment

December 2018

Investing to protect the planet's natural resources requires a deep understanding of industry's ecological footprint. Our environmental strategy has a model for that. 

Once a niche activity, environmental investing is now moving firmly into the mainstream. The problem investors face, however, is that there is no universally accepted method for measuring a company’s environmental footprint. Much of the environmental auditing that currently takes place is either too subjective or too narrow in scope: knowing how much carbon a business emits is useful but does not give the complete picture.

This is why the investment managers of our Pictet-Global Environmental Opportunities (GEO) strategy have developed a distinctive process that deploys a scientific, rule-based framework to measure the environmental footprint of each of the 100-plus industries that make up the global economy.

Combining two globally-recognised analytical tools - the Planetary Boundaries framework (PB) and Life Cycle Analysis (LCA) - the model is the lens we use to identify the world's most sustainable industries. 

The PB-LCA represents the initial phase of the GEO investment process, and is explained in detail below. Once this audit is complete, our investment managers then undertake company-by-company research to identify firms with products and services that can help reverse environmental degradation.

 

GEO planetary boundaries.svg

The Global Environmental Opportunities strategy 

  • The strategy invests in the shares of companies that are making an active contribution to safeguarding the world’s natural resources.
  • Investments are chosen from a broader universe consisting of the world’s 3,500 most environmentally-responsible publicly-held firms – companies that meet the criteria of our proprietary ESG framework.
  • The strategy is a concentrated portfolio of 50 to 60 stocks, with investments in firms operating in fields such as pollution control, water supply, renewable energy, waste management and sustainable agriculture.
  • With a risk-return profile similar to that of a growth-oriented investment strategy, Pictet AM's Global Environmental Opportunities can be used to complement an equity allocation within a global portfolio.