Climate+A multi-private assets impact solution supporting the transition towards net zero economies
Aims to facilitate the transition to a more sustainable future through its investments in climate and social impact themes
Strong diversification across asset classes and geography in a single solution
Uses a UK authorised open-ended fund structure (LTAF) that enables investment in long-term, illiquid assets relevant for all institutional investors including DC schemes
Multi-private asset portfolio with a focus on climate and social impact
Our innovative Climate+ strategy aims to contribute positively to climate change and support the transition towards net zero economies throughout its investments. By building and operating a diversified portfolio across private markets asset classes and sectors focused on climate and social related themes, the strategy aims to facilitate the transition to a more sustainable future.
We recognise that the climate crisis is not the only challenge we face. This strategy also finances projects with clear social benefits, such as affordable real estate and governance.
Our long-term impact themes
Since the environmental & social challenges we face are complex, we focus on four key impact themes:
- Mitigation: Efforts to reduce or prevent emission of greenhouse gases through the use of new technologies & energy efficient equipment, or changing consumer behaviour.
- Adaptation: The process of adjusting to current or expected climate change and its effects. Building resilience to climate change for individuals and communities.
- Natural Capital and Biodiversity: The consideration of the world’s stock of natural resources, including soil, water etc.
- Social Vulnerabilities: The contribution to a more inclusive and equitable society, especially to vulnerable and underserved populations.
Making private assets investing accessible
We believe that responsible private market solutions are an important part of any investment portfolio and should be widely accessible. That’s why we use a single portfolio to harness the best of Schroders Capital’s internal expertise and selected external capabilities to invest across infrastructure, real estate, private equity and biodiversity and natural capital.We’ve coupled this with an innovative, open-ended long-term asset fund (LTAF) structure. This enables liquidity opportunities and the opportunity for institutional investors – including DC schemes – access to long-term, illiquid assets.
Why is now the time for DC schemes to consider Private Assets?
Why is now a good time for DC schemes to consider private assets? Tim Horne, Head of UK Institutional Defined Contribution and Emily Pollock, Client Director, Private Assets, Schroders Capital discuss in this short video.
How can impact be achieved in Private Assets?
How are investors thinking about impact investment within their private market allocations? Tim Horne, Head of UK Institutional Defined Contribution and Emily Pollock, Client Director, Private Assets, Schroders Capital discuss in this short video.
A global climate solution with expert credentials
Every aspect of Climate+’s strategy benefits from our expertise. It uses a full range of specialist internal capabilities from Schroders Capital and best-in-class external manager funds such as natural capital. We also draw on the knowledge and experience of BlueOrchard, our impact investment business who have over 20 years of expertise in impact investing.
This all contributes to a solution with demonstrable positive impact, fully measurable using our comprehensive impact framework. That also means you’re fully informed on the benefits the portfolio is delivering, from negating carbon emissions to powering homes.
“Climate change is one of the most pressing issues of our time and private assets have a role to play in financing the Just Transition we must make. UK pension schemes want the opportunity to participate in tackling this generational change, as well as generate sustainable returns. The launch of the Climate+ strategy will enable investors to take advantage of the diversification and performance private assets can deliver, as well as the sustained momentum now being directed towards the global transition to net zero and green economies.”
Head of UK Institutional Defined Contribution
Key Investment Risks
While private assets investments offer potentially significant capital returns, funds and companies may face business and financial uncertainties. There can be no assurance that their use of the financing will be profitable to them or to any Fund. Investing in private asset funds and unlisted companies entails a higher risk than investing in companies listed on a recognised stock exchange or on other regulated markets. This is in particular because of the following major risk factors:
Capital loss risk: The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.
Liquidity risk: The fund will invest in long term illiquid instruments. Illiquidity increases the risks that the fund will be unable to sell its holdings in a timely manner in order to meet his financial obligations (including payment of redemptions) at a given point in time. Illiquidity of the underlying assets also means that in order to achieve a timely realisation, assets may be sold at a price that does not reflect their fair value, resulting in a reduction of the fund’s net asset value.
Valuation risk: Private asset investments are generally valued on a less frequent basis than listed securities. In addition, it may be difficult to find appropriate pricing references for private asset investments. This difficulty may have an impact on the valuation of the fund’s portfolio. Certain investments are valued on the basis of estimated prices and are therefore subject to potentially greater pricing uncertainties than listed securities.
Private equity risk: Compared to investments in public equities, investments in private equity involve a number of additional risks. Private equity-owned companies may be less mature with new or unproven management, technologies or business strategies and they may face competition from larger better resourced competitors.Private equity-owned businesses may be financed through extensive borrowings, increasing the risk of failure if cashflows are not sufficient to service the borrowing costs
Real estate risks: Real estate investment is subject to a variety of risks includingthe cyclical nature of real estate values, general economic conditions, increases in property taxes, environmental risks, changes in laws (e.g. environmental and zoning) and the risk that one or more tenants may be unable to meet their rental obligations.
Infrastructure risks: The fund intends to invest in infrastructure assets with a focus on renewable energy and other sustainable infrastructure. The renewable energy sector greatly depends on political and governmental support for the increased use of renewable energy. Unanticipated changes to the applicable legal, regulatory and policy framework or the support provided could have a material adverse effect on the operations and financial performance of fund’s infrastructure investments.
Sustainability: The fund applies sustainability criteria in its selection of investments. This investment focus may limit the fund's exposure to companies, industries or sectors and the fund may forego investment opportunities that do not align with its sustainability criteria chosen by the investment manager. As investors may differ in their views of what constitutes sustainability, the fund may invest in companies that do not reflect the values of any particular investor.