- FSSA Greater China Growth Fund – founded on stewardship
- Stewart Investors Indian Subcontinent Sustainability Fund – sustainability is key to its strategy
- Fidelity Sustainable Asia Equity Fund – invests in companies highly-rated on ESG measures
Tara Clee, ESG Analyst, Hargreaves Lansdown:
“Asia is one of the regions most vulnerable to climate change and yet it’s also a key contributor to global warming. Some of this can be mitigated by deploying cleaner energy, more sustainable construction practices, electric vehicles and addressing the agriculture industry. Fortunately for investors, the infrastructure is largely already in place, and so is the ambition. China, for example, is leading in renewable energy production and is the largest producer of wind and solar energy. The nation has pledged to reduce emissions to net zero by 2060.”
Q1 2022 hedge fund letters, conferences and more
We look at three funds focused on sustainability in Asia, aiming to accelerate the green transition.
FSSA Greater China Growth Fund
“Martin Lau, lead manager of the FSSA Greater China Growth fund, invests in high-quality companies with strong cash flows, an ability to keep costs under control and high standards of company management. This fund focuses on the Greater China region, and invests in companies based in, or that carry out most of their business in, China, Hong Kong or Taiwan.
The team’s investment philosophy is founded on stewardship. They engage with companies to make sure they’re run in a way that’ll benefit all shareholders, and also consider environmental, labour and other governance issues.
One of the fund’s holdings, EEN Energy, is a privately owned gas distributor. It’s proactively reducing emissions and providing alternative low-carbon solutions. For example, they’ve recently switched their transportation fleet to only use clean fuel vehicles.
Lau recently engaged with the company on various environmental, social and governance (ESG) issues, like improving data disclosure and setting firmer ESG targets. EEN has been receptive and understand they need to transition away from natural gas. Major areas of focus include energy storage, carbon capture, hydrogen energy, geothermal energy, and converting biomass waste into fuels.”
Stewart Investors Indian Subcontinent Sustainability Fund
“Stewardship and sustainability are a core part of the Stewart Investors Indian Subcontinent Sustainability fund’s investment strategy. The fund’s managers, Sashi Reddy and David Gait, invest across India, Pakistan, Sri Lanka and Bangladesh.
The fund focuses on companies they believe could benefit from, and contribute to, the sustainable development of the countries they’re based in.
One of the fund’s largest investments is Mahindra & Mahindra, an Indian conglomerate. The real estate and infrastructure development arm of the group has been recognised as a climate change leader in India.
The company develops, and supports research on, green buildings tailored to climatic conditions in India. It does this through climate-responsive design, green architecture, and environment-friendly building materials, sourced through a sustainable supply chain.”
Fidelity Sustainable Asia Equity Fund
“The Fidelity Sustainable Asia Equity fund invests across Asia (excluding Japan). Manager Dhananjay Phadnis invests at least 70% of the fund in companies that are highly-rated on ESG measures. The rest is invested in companies that might not score highly today, but are on an improving trajectory.
The manager also avoids companies some might consider unethical, like tobacco companies, oil & gas extractors and makers of controversial weapons.
The manager recently engaged with a bank they hold that’s made progress on climate financing and improving the transparency of their emissions reporting. Although the bank’s targeting a complete phase out of coal lending by 2037, they’d like to see the company bring forward its commitment and will continue to press for more progress.”
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