Investment approach
The Fund gains exposure to a high conviction portfolio of 30-40 stocks with a pure play environmental focus
Key features of the investment process
The Fund aims to have at least 80% of invested capital in companies where the majority of revenues or profits stem from tackling a specific environmental problem. All holdings must be making significant contributions to environmental solutions. ​
​
The portfolio is well diversified across opportunity set, geography and market cap. Individual stock weights are a function of expected upside, risk, degree of conviction, liquidity, and portfolio diversification. ​
​
The portfolio aims to be generally style neutral and given the nature of the specialisation of the Fund, there are no set formal constraints on stock, country or sector weights. A separate risk team monitors stock, sector and country risk in the portfolio.
Which companies does the Fund invest in?​
A 4-step hurdle process is applied to assess whether companies are legitimately providing environmental solutions, and whether they qualify for potential inclusion in the Fund: ​
Are they making a significant contribution to solving environmental problems​
That they do not operate in harmful value chains​
- unless that value chain is inevitable and the company’s product or service is mitigating its impact
- and the company’s product or service isn’t preventing the emergence of a better alternative​
They do not have significant negative environmental externalities or Social & Governance shortcomings​
4 step hurdle process
The steps and criteria in this process are as follows:
1
Does the company’s product or service in focus make a significant contribution to solving an environmental problem via contributing to any of the following? ​
Reduced GHG emissions ​
Reduced land usage
Reduced water usage
Reduced waste / pollution
Reduced raw material usage
Reduced noise / light pollution​
Improved air quality or promoting biodiversity​
2
Is the product or service embedded within a value chain that is environmentally beneficial or better than alternatives?
3
Is the value chain in which the company’s product/service is involved inevitable and is the product/service mitigating the impact of that value chain?​
4
Does the target company
Have > 10% of its business from significantly environmentally harmful activities?
Have significant Social or Governance shortcomings?​
Produce any significantly negative environmentally harmful externalities?​
Impact investing 2.0: the next level​
The first generation of impact investment strategies have been successful in channeling their capital towards companies that are enabling the green transition.
​
TT has taken this a step further by sharing its revenue with charities that make a direct impact on the environment. ​
​
TT aims to take a lead in this regard as one-third of all TT's management fees are given to carefully selected environmental charities that help to tackle the twin problems of climate change and biodiversity loss.
Which Charities are supported?​
Currently, two charities are being sponsored through the Fund’s investment program. The focus is currently in reforestation as research suggests that planting trees and ‘rewilding’ habitats are the most effective ways to tackle climate change and biodiversity loss.