Schroder ISF* Global Climate Change Equity

The earth’s surface is warming up at a never before seen rate. It is now clear that climate change poses grave environmental risks, but we are only just starting to understand the potential social and economic effects.

Many governments around the world have committed to achieving net zero emissions by 2050. But action to bring down greenhouse gases to combat climate change must accelerate if we are to meet global climate change goals:

• 2.0°C: Paris Agreement goal of limiting global temperature rises to 2°C above the pre-industrial baseline.
• 3.7°C: Current long-run temperature rise estimates.
• 80%: Reduction of greenhouse gases per capita by 2050 is needed to meet the 2°C limit. To do so, a radical change in the structure of the global economy is required.

Not your typical climate change fund

Climate change is going to impact every company, so we look for opportunities across a global, well-diversified opportunity set rather than limit ourselves to particular sectors.

In doing this, we can construct a well-diversified portfolio of different companies across sectors, all linked to climate change. We do, however, exclude companies which generate significant revenues from fossil fuels.

We go deeper to find the measures that matter

An active approach to managing the sustainability risks is no longer optional - it is essential. Having said that, it is also very difficult. At Schroders, we don’t rely solely on traditional measures like carbon footprint. We use proprietary tools and analysis to build a more detailed and accurate picture of how companies and industries will evolve and adapt. We’re looking for how climate change will affect revenue, margins, running costs, valuations and the impact on the entire value chain. This gives us the best opportunity to pick those companies that will flourish as part of a low-carbon economy and, ultimately, potentially deliver better returns for you.

We’ve been doing this a long time

The fund has been successfully running since 2007 and is one of the pioneers in its field. It benefits from the expertise of investment professionals with experience in sectors like technology, energy and utilities; exactly the ones set to be impacted by climate change. We also have a dedicated sustainability team who understand the science of climate change and how it links to economic trends as well as data scientists to provide us with unique insights that others may not be able to spot.