Emit Capital Climate Finance Equity Fund

The objective of the Fund is to generate consistent and sustainable long-term returns after fees and expenses, in excess of the Benchmark. The Benchmark is the MSCI All Country World Index (AUD).

Investment Strategy

At the core of Emit Capital’s investment philosophy is a focus on global listed equities where the business activities of those companies are assessed to make a meaningful reduction in climate change. This core theme sets the basis for the top-down sector and industry selection and focuses on the following sectors/business models:

• Energy transformation (for example, renewable energy generation);
• Transport & related infrastructure (for example, electric vehicles);
• Energy efficiency & storage (for example, battery storage); and
• Water management (for example, filtration & waste treatment).

The secondary layer of Emit Capital’s thematic screening is adherence to ESG and Impact Investment principles and the ability to achieve a sustainable ‘score’ for across the individual investments and the portfolio as a whole. 

These principles are contained in our Responsible Investment Policy which governs the nature of the Fund's investments as well as thresholds with respect to ESG and Impact Investment. 

Utilising its industry and sector analysis, Emit Capital undertakes a fundamental bottom-up analysis using qualitative and quantitative analysis to identify companies assessed to offer the best value and combination of preferred equity factors. Emit Capital focuses on the potential for earnings growth, and the ability to leverage the underlying business case in the context of its overall theme.

It is intended that the portfolio will hold between twenty (20) and fifty (50) listed companies with a market capitalisation over $US 100 million traded on global exchanges. The strategy evaluation universe is regularly updated to incorporate new listings and eligible companies.

The investment strategy holding time horizon is typically five to seven years because that is where we believe that most valuation and information inefficiencies exist. The Manager monitors macro factors and trends across the broad economy as well as within the climate finance sector to measure the impact on each of the chosen companies.

The portfolio aims to be appropriately diversified by industry, geography and risk factor and asset weightings of individual names reflect:

• The valuation gap between the current market price and Emit Capital’s assessed value;
• The Manager’s level of conviction and views on appropriate investment timing; and
• Liquidity and market capitalisation of the company.

The portfolio aims to be fully invested in normal market conditions, while keeping a flexible allocation to cash (up to 10% of Assets of the Fund to ensure effective operation of the strategy.

Emit Capital’s ESG screening process focuses on the following:

• Key principles it believes are important to achieving sound ESG credentials for a company;
• Specific areas of a companies practice that are avoided due to the negative impact on ESG score; and
• Developing an overall scorecard for each company based on its key ESG focus and avoided practices.

Key ESG Principles

The following principles are business practices or outcomes Emit Capital supports, and which therefore form a key component of its stock selection process:

• Clean air outcomes – low greenhouse gases (GHG);
• Land health;
• Sustainable product lifecycle;
• Clean oceans;
• Company transparency;
• Sound business models with ESG components embedded;
• Ethical leadership;
• Gender & racial equality; and
• Consumer safety standards.

ESG Scorecard

Those companies that meet the Manager’s ESG principles are then considered for inclusion in the Fund’s portfolio of investments. Specifically, there needs to be an alignment of the company’s principles with the Manager’s own baseline requirements for ESG.

Emit Capital incorporates Impact Investment values into its analysis and portfolio construction. We believe these values complement the climate finance themes and ESG analysis which underpin our investment philosophy. 

The Impact Investment values the Fund aligns to are:

• Clean Air
• Land Health
• Ocean Life
• Pure Water
• Mindful Business Models

One Fund Services Limited (“OFSL”), ACN 615 523 003, AFSL 493421, is the issuer and trustee of the Emit Capital Climate Finance Equity Fund. The material contained in this communication is general information only and was not prepared by OFSL but has been prepared by Emit Capital Asset Management Pty Ltd (“Emit Capital”), a Corporate Authorised Representative of One Wholesale Fund Services Ltd (“OWFS”), ACN 159 624 585, AFSL 426503. Emit Capital has made every effort to ensure the accuracy and currency of the information contained in this document. However, no warranty is made as to the accuracy or reliability of the information. Investors should consider the Information Memorandum (“IM”) dated 20 May 2022 issued by OFSL before making any decision regarding the Fund. The IM contains important information about investing in the Fund and it is important investors obtain and read a copy of the IM before deciding about whether to acquire, continue to hold or dispose of units in the Fund. You should also consult a licensed financial adviser before making an investment decision in relation to the Fund. Past performance is no guarantee of future performance. This report does not take into account a reader’s investment objectives, particular needs or financial situation and is general information only to wholesale investors and should not be considered as investment advice and should not be relied on as an investment recommendation.