Bruno Bertocci

Head of the Global Sustainable Equities team

Regulatory change and an increasing awareness of the environment have made climate investing the new normal for investors. As our society and economy move towards a new low-carbon model, an increasing number of investors are asking how they can align their portfolio with needed changes while retaining their long-term investment goals.

Our strategy is a portfolio that invests in companies ready to succeed in a low-carbon economy. We address climate change as a systemic problem, looking at the economy in a holistic way to find climate change leaders.

The portfolio is concentrated investing worldwide in companies that are attractively valued and demonstrate leadership in three categories: climate mitigation (companies addressing their own operations), climate adaptation (product and services providing solutions to a low-carbon future), and climate transition (companies transforming their business models).

The portfolio has significant exposure to environmental themes but approaches climate change as a systemic issue, enabling the construction of a diversified portfolio with a low carbon footprint. 

When we think about the challenge of climate change, we are looking at the economy in a systemic way, analysing change across all sectors. This means finding companies that are leaders in energy efficient technologies, such as smart mobility and precision agriculture, that have the potential to transform our environment. We also look to invest in select energy producing companies that are transitioning towards a low-carbon model.

We believe that investors can make a difference by targeting sectors that are current carbon emitters but that have a strategy to move to meaningfully more favorable climate profiles. By targeting these companies that recognize the need to change and supporting that change through robust engagement, investors can support the transition to a lower carbon world. 

It is vital that global greenhouse gas (GHG) emissions decrease dramatically to effectively address the risks of climate change and global warming.

Historical and Projected GHG Emissions (GTCO2eq) to 20301

Source: Climate Action Tracker (2018)

Global greenhouse gas (GHG) emissions must decrease dramatically to effectively address the risks of climate change and global warming

Investors’ ambitions have been limited by the lack of climate-material data – either because of lack of disclosure from companies or because of the inability to tie investment strategy to climate model outcomes.

Data is improving through increased disclosure and the efforts of organizations such as the TCFD, but we cannot afford to wait for perfect data.

Consequently we are leveraging a combination of proprietary climate models - Climate Aware Glide Path – a quantitative model that compares the company's carbon footprint trend with the required emission reduction implied by 2 degrees global warming scenario , estimating the probability that the company will achieve those glide path targets and our qualitative assessment of a company’s climate and environmental profile, lifted by engagement.

We believe that a combination of insightful analysis and active engagement has the best opportunity to help change the world's environmental profile for the better. 

Canada Asset Management

Views and opinions expressed are presented for informational purposes only and are a reflection of UBS Asset Management’s best judgment at the time a report was compiled, and any obligation to update or alter forward-looking statement as a result of new information, future events, or otherwise is disclaimed. Commentary is provided at a macro level and is not with reference to any investment strategy, product or fund offered by UBS Asset Management and is provided in Canada generally pursuant to the registration exemption provided for in Section 8.25(2) of National Instrument 31-103 and in Ontario pursuant to Section 34 of the Securities Act (Ontario) and does not purport to be tailored to the needs of the person or company receiving the advice.. The information contained in the materials should not be considered a recommendation to purchase or sell any particular security. The materials and content provided will not constitute investment advice and should not be relied upon as the basis for investment decisions. As individual situations may differ, clients should seek independent professional tax, legal, accounting or other specialist advisors as to the legal and tax implication of investing. Plan fiduciaries should determine whether an investment program is prudent in light of a plan's own circumstances and overall portfolio. UBS Asset Management services offered to Canadian persons are provided by UBS Asset Management (Canada) Inc., a Nova Scotia corporation. UBS Asset Management (Canada) Inc. is an indirect wholly-owned subsidiary of UBS AG and is registered as a portfolio manager and exempt market dealer (in all provinces of Canada), commodity trading manager (Ontario), adviser – commodity futures (Manitoba) and investment fund manager (Ontario, Quebec and Newfoundland), all pursuant to Canadian securities law. Materials may include forward-looking statements. Actual future results, however, may prove to be different from expectations. Past performance is no guarantee of future results. Potential for profit is accompanied by possibility of loss.

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