EUROPE - A fund has been launched which allows institutional investors and pension funds to invest specifically in companies focused on climate change.
The Cowen Climate Change Fund is the sixth sub-fund to be unveiled by Cowen Asset Management Limited since the launch of its Dublin-registered OEIC earlier this month, and it utilises the HSBC Global Climate Change Benchmark for its constituents.
Being more focused in nature than many socially-responsible investment (SRI) offerings, the fund is invested in a concentrated portfolio of 50 global companies "involved in or focused on reacting and adapting to the effects of climate change and which are likely to see business growth opportunities as a result of climate change, through solar, nuclear, wind, biofuels, fuel-efficient vehicles, building insulation, fuel cells, energy efficiency, waste, integrated power and water.
Their offering also allows larger pension funds with specific segregated mandates to exclude certain categories of stock, for example nuclear, should they choose to do so.
Cowen's is the second fund to be launched within the last month specifically labelled as a climate change specialist, following Abn Amro's clean technology fund launch in December. (See earlier IPE story: Abn unveils 'clean' technology fund)
However, Ann Ellis, sales & marketing director at Cowen Asset Management, believes this is a market of increasing interest to European pension funds looking to match environmental and social governance desires with continuing growth in investments.
"The investment opportunity is huge - the Stern Review Report estimated that the value of the low carbon energy market would be $500bn (€340bn) by 2050 and the United Nations is anticipating a US$100bn demand for projects generating greenhouse gas emissions credits by 2030," said Ellis.
Criteria for inclusion in the HSBC index is very strict, notes Malcolm Thomas, chief executive at Cowen Asset Management, and the fund itself has a minimum requirement on every company to ensure adequate liquidity of over $1bn and more than 50% of revenue is generated from climate change-related activities.
Stocks like BP, for example, therefore cannot be included in the fund, according to officials at the firm, because they do not have more than 50% of their revenues derived from climate change activities.
This is perhaps especially relevant as some pensions funds, such as that run for the UK's Environment Agency, have sought to pursue a strong ESG policy wherever possible but still invest in companies such as BP because they have a fiduciary responsibility to ensure they obtain the best possible return on investments for their members.
The Environment Agency revealed in its 2007 annual report its biggest stock holdings was in BP, at 6.1% of its total equity holding.
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