We see three key differentiating elements of TT’s environmental impact strategy.

Firstly, it's a pure play approach. So 80% of our invested capital needs to be in companies for whom the majority of what they do is producing an environmental solution for a product or service. And the remaining 20% still has to be invested in companies who are producing environmental solutions, although it doesn't necessarily have to be the majority of what they do.

When we define an environmental solution, we have an extremely high threshold for inclusion and we're only looking for significant, as opposed to marginal, environmental gains.

Secondly, this is a genuinely global approach, so approximately a quarter of our positions and a quarter of our capital is invested in emerging markets. We think that with so much of the world's environmental technology coming out of Korea, Taiwan and China, there's enormous alpha to be gained from understanding and investing in these value chains.

Thirdly, we think about impact in a different way. In this strategy, we give a third of the revenues generated from our management fee to charities involved in biodiversity or climate action, producing a differentiated and genuine impact globally.

There were three principal reasons why we created an environmental impact equity strategy.

Firstly, when we looked at the markets back in 2019, we saw there simply weren't many environmental solutions products out there. There were lots of funds that were seeking to have low carbon and typically had high exposure to US tech, financials and consumer goods companies. There were strategies perhaps looking to invest in best in class companies, although often in sectors with very dubious environment benefits. But there weren't many strategies focusing purely on solutions on the companies which are going to provide the products and the services which enable green transition.

Secondly, we felt that where there were these funds in existence, they were focused exclusively on carbon and we felt that the environmental challenges upon its facing are broader than that and they encompass many issues around biodiversity which we consider to be equally existential and intimately linked to the carbon cycle.

The other reason why we created this strategy is that we believe there is an enormous alpha opportunity over the next 20-30 years, every sector in the planet is going to be remade, reconstituted and new winners are going to emerge based on their ability to adapt and enable green transition.

We think that fund managers who have focused on these companies have enormous opportunities for outperformance.

We have a strict and thorough bottom up process for determining whether a company reaches the environmental criteria for inclusion.

Underlying it, a number of important principles.

Firstly, we're only looking for companies who are creating significant environmental benefits. We're not looking for marginal gains.

Secondly, if the company in question is also producing significant environmental harms above a threshold of 10%, then we will not consider it eligible for investment. Those environmental harms could be gas, oil, coal, single use plastics, the internal combustion engine, for example.

Thirdly, if social governance harms are being caused by the company of a magnitude which undermines the environmental benefits created in our first step, then we'll also not consider the company appropriate for investments.

Finally, we only want to be investing in solving long running environmental problems. If we feel that the company in question is investing in a a value chain which is on its way out, for example, the internal combustion engine, then we'll not consider it appropriate for investments.

In this instance, we'd rather invest in the new technology, which will displace the internal combustion engine rather than try to make it marginally better. We'd rather invest in EVs then trying to find an incremental improvement to legacy technology.

In our strategy, we invest in seven key themes.

The first three of which we can bucket under energy transition. They're clean transport, clean generation and electrification and energy efficiency.

But we also invest in four incremental themes, forestry and agriculture, water recycling and circular economy, and responsible consumption. And the addition of those four themes is very important for two reasons.

Firstly, because it allows us to tackle environmental issues relating to biodiversity, land use, pollution, toxicity.

But secondly, it allows us to get exposure to factors which don't tend to appear in the environmental transition universe. We have exposure to commodity cycles, cyclicality as well as highly defensive visible revenue streams that you might see within recycling or water.