First CDP climate-related investment fund launched
CDP has today (31 January) co-launched an equity fund dedicated to investing in companies that best manage risks associated with climate change.
The not-for-profit has teamed up with CPR Asset Management to launch the fund which will have a portfolio of 700 stocks across all sectors and regions. Investments will be made in businesses seeking to meet the Paris Agreement’s target to limit global warming to 2C this century.
By incorporating environmental data from CDP, CPR AM will be able to assess a company’s ability to generate sustainable economic growth.
“We are delighted to be working with CPR AM on this ground-breaking fund, especially at such a critical time for climate change globally,” said Laurent Babikian, director of investor engagement at CDP Europe.
“Corporate transparency on environmental issues is key but this information needs to be priced in and integrated by the market, in order to shift capital at the pace required.”
The fund’s focus on responsible investing is underpinned by external climate ratings through CDP and science-based targets (SBT) data. It will also offer an extensive ESG filter at different levels of granularity, and an exclusion of high ESG controversies through a third filter, CPR AM claims.
This approach allows CPR AM to analyse businesses across all sectors and assess if they are considering climate-risk within their corporate strategy and product innovation.
Babikian continued: “The launch of this fund demonstrates that information on corporate climate performance is not only being requested by the market but is being used in investment decision-making, in this case through stock selection and screening.”
Climate risk disclosure comes to fore
The news comes a week after CDP named 140 corporates as leaders in the fight against climate change, water scarcity and deforestation in its new A List rankings for 2019.
CDP estimates that less than half (44%) of European corporates are currently tracking how climate challenges will affect their business models in the future or disclosing the full extent of their environmental impacts.
In related news, new analysis suggests that the global green bond market is expected to grow this year. According to research from S&P Global Ratings, the market could increase by 8% this year, thanks to factors such as policy and regulation, rising awareness of environmental risks and new business opportunities, and greater interest from issuers and investors.
Green bond issuance is expected to reach $180bn (£137bn) in 2019, following the market’s record high of $167bn (£127bn) last year.