Storebrand Global ESG Plus

The Storebrand ESG Plus Strategy

First, fossil fuel companies are excluded (defined as those whose revenues from fossil-related activities exceed 5% of total revenue). Furthermore, the fund takes steps to ensure it is consistent with a fossil-free philosophy, which includes removing companies with large fossil reserves, and companies which have a large exposure to the value-chain of fossil fuel producers.

Next, in addition to the Storebrand Standard group-wide exclusion policy, extra exclusion removes companies involved in alcohol, gambling, weapons or pornography from the investment universe. Investments are then tilted towards high ESG and low carbon footprint scoring companies.

Finally, 5-10% of the portfolio is invested in solution stocks from a positive ‘white-list’ of around 100 companies which provide products and services that facilitate the transition to a low carbon economy (e.g. renewables, energy efficiency, low emissions transport and recycling).

The portfolio is constructed using the MSCI Barra risk model to minimise tracking error towards the market cap benchmark, MSCI World, subject to a list of climate-motivated constraints: Not investing in fossil fuel companies; investing significantly more than the benchmark in climate solutions companies; having a high ESG rating and a low carbon footprint. The strategy results in a broadly diversified, highly liquid and climate-aware portfolio with low tracking error.

A short film introducing Storebrand Global ESG Plus

Investment Strategy

Storebrand Global ESG Plus is a unique fossil-free global equity strategy which aims to provide long-term capital growth through a model-based portfolio of developed market equities. The fund is managed systematically and seeks to reproduce the risk and return profile of the MSCI World Index whilst excluding companies within fossil fuel related industries and with additional ESG criteria and sustainability focus.

The strategy seeks to provide a low cost investment solution for the global climate emergency by using five key components:

Engagement

We are active owners and engage on behalf of all assets we manage, both individually and via collective forums such as Climate Action 100+.

Divestment

We exclude fossil fuels (>5% of sales) and companies with climate negative exposures (e.g. plastics and meat).

Green Solutions

We allocate <10% of the portfolio to climate solutions companies, such as renewable energy, green transport, recycling, water and energy efficiency.

Low Carbon Footprint

We optimise the portfolio, using full lifecycle emissions where possible, to minimise carbon exposure.

ESG Score

We have developed a proprietary ESG rating system to analyse over 4,000 companies, using qualitative and quantitative assessment of sustainability risks and opportunities.

Since inception over three years ago, the strategy has provided index relative returns of +1.1% with low tracking error, low carbon risk, low stranded asset risk, high exposure to green revenues and a stronger ESG score*.

*Based on SPP Global Plus track record, inception April 2016, gross of fees and in GBP. Other metrics based on Morningstar and internal analysis of Storebrand Global ESG Plus Fund vs. competitors and low carbon index strategies.