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global environmental opportunities: sizing the environmental impact

January 2019

Uncovering the true guardians of the environment

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

Important Note

• Pictet-Global Environmental Opportunities (the "Fund”) applies a capital growth strategy, by investing principally in equities or equities related securities issued by companies throughout the world (including emerging markets). It will invest mainly in securities issued by companies active throughout the environmental value chain, for example in sectors such as but not limited to agriculture, forestry, clean energy and water.
• The Fund’s investments are concentrated in the environmental sector.  The Fund may be adversely affected by or depend heavily on the performance of the securities issued by companies in the environmental value chain. Therefore, this may have an adverse impact on the Fund’s NAV.
• The Fund may have exposure to emerging markets including but not limited to China. Due to the political and economic situations in emerging countries, investment in the Fund presents, among others, greater legal, political, social, economic policy, volatility, currency, exchange, tax, capital repatriation and liquidity risks.
• Investors should not only base on this marketing material alone to make investment decisions

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.

 

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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.