Fund Size: £2048.60m

Total screened & themed / SRI assets: £49415.00

Total Responsible Ownership assets: £174795.00

Total assets under management: £638000.00

As at: 07/04/25

Contact: lrichards@pictet.com

Overview

Filters

Fund information

Policy

The primary purpose of a thematic equity strategy is to invest in assets whose returns are influenced by structural forces of change that evolve independently of the economic cycle. In other words, thematic investing focuses on identifying enduring sources of capital growth and investing in themes supported by the tailwinds of global, long-term, secular growth trends. The Clean Energy strategy is entirely focused on the global clean energy transition and climate change mitigation, underpinned by megatrends of Sustainability, Focus on Health, Economic Growth and Technology Development. By actively selecting the best stocks out of a broad and dynamic investment universe, we intend to construct a portfolio with superior risk/return characteristics compared to global equities while having a positive impact on the environment.

Sustainability: Increasing awareness and urgency to respond to climate change

The continued use of fossil fuels, and the carbon and particle emissions that result from it, is harmful to both societies and the environment. Concern about climate change is growing, with increasing urgency from civil society, companies and also governments to address this issue. This has been reflected in youth movements and global protests over the last years (e.g. Fridays for Future Movement) amongst civil society, companies that are stepping up their commitments to clean energy (as illustrated by initiatives such as the Renewable Energy 100 coalition), and most notably government commitments towards a clean energy transition and green economy (e.g. European Green Deal, China's Net Zero Carbon announcement).

There is a widespread consensus on the need to reduce the environmental impact of generating, transmitting and consuming energy. Despite tight budgets and competition for resources,  governments continue to support a move towards less carbon-intensive, more efficient, and cleaner sources of energy. The transition to a lower-carbon world is a powerful trend that is unlikely to be derailed by fluctuations in the global economy. In fact, the resolve of policy makers appears to have strengthened in many regions (e.g. Europe, China, US).

Focus on health: Growing Health Concerns

Today more than 90% of the world population lives in areas where the particle levels exceed the World Health Organization's global air quality guidelines. The continued use of fossil fuels is increasing the occurrence of many health issues, such as the respiratory problems that result from air pollution - contributing to millions of premature death each year. As living standards improve and populations start to demand better living environments, health considerations arising from excessive pollution are also playing an increasing role in shaping government regulation in energy and transportation industries.

Economic growth: Rising Energy Demand

Global population growth, increasing per capita usage and sustained economic expansion in emerging markets such as India and China are driving the growing demand for energy, which in turn increases GHG emissions and takes air pollution to alarming levels if these are to be based on traditional fossil fuel sources. Cleaner energy sources and energy-efficient technologies are needed to ensure these needs can be met without threatening public health or further contributing to climate change. Furthermore, the vast majority of traditional energy resources are finite and unevenly distributed, making security of supply one of the most pressing concerns for many countries today. Volatile energy prices coupled with the fight against pollution as well as GHG emissions are strong drivers to find alternative sources of power and to reduce energy consumption.

Technological development: Improving Economics

Clean energy solutions have seen a remarkable drop in costs to the point where they are economically competitive today. For example, the costs of solar energy have dropped by 80% since 2010, whereas the price of lithium ion batteries (for e-mobility and energy storage) have dropped by 88% over the past 10 years. The solutions that were deemed uneconomically attractive a decade ago, have become some of the most cost-competitive and economically sensible solutions today thanks to improved technology and innovation.

Process

We first identify an initial universe of listed companies that help the transition towards a lower-carbon economy. Defining the theme ensures that only companies with sufficient exposure to Clean energy-related activities are eligible for investment.

We include companies in the investable universe only if at least 33% of the sales (or Enterprise Value, EBIT or EBITDA) is derived from products & services that support the transition to a lower carbon economy.

By applying the positive screen, we narrow the universe down from 40,000 to 250 companies with high exposure to the theme.

When defining the investment universe of Thematic strategies, we systematically exclude stocks that have negative impacts on the environment or society. If a company’s revenues generated by such activities are above the threshold, the company is excluded from the universe.

Some sectors that are often considered low-carbon energy sources are not included in our investment universe. This concerns in particular nuclear energy. Nuclear power plants do not emit greenhouse gases but generate highly radioactive waste that remains active for thousands of years. Therefore, we do not consider nuclear power a sustainable solution. Furthermore, since 2019 natural gas bhas been removed from our investment universe, which has overall improved the environmental profile of the portfolio. Companies that invest Growth Capex in new coal mine or power plant developments projects are also excluded from the Clean Energy investment universe.

We also exclude companies in severe material breach of UN Global Compact Principles on human rights, labour standards, environmental protection and anti-bribery/corruption.

Exclusions are based on reliable sources gathered from reputable third-party research providers. Pictet AM retains full discretion over exclusions and always reserves the right to deviate from third party information on a case by case basis.

Resources, Affiliations & Corporate Strategies

Pictet Asset Management has a dedicated ESG Team which leads and co-ordinates implementation of our responsible investment policy, including ESG integration in investment processes, ownership practices, risk management and reporting tools. The ESG Team reports directly to Sébastien Eisinger, Managing Partner Pictet Group, Co-CEO Pictet Asset Management and Head of Investments.

Key responsibilities include:
 

Investments

• Selection and due-diligence of external data providers in collaboration with investment teams and other B/Ls
• Development of proprietary assessment methodologies (eg sector-specific “E&S Deep Dives”, sovereign issuers)
• Integration of relevant ESG datasets in IT systems and definition of quality checks
• Training and awareness raising of investment teams

Active Ownership

• Definition of engagement strategy and proxy voting policy
• Co-ordinate targeted engagements and participation in collaborative initiatives
• Consensus building between investment teams on specific resolutions

Pictet Asset Management has been a signatory of the UNPRI since 2007. In addition, Pictet Asset Management actively participates in several investor initiatives aimed at sharing best practices between asset managers and owners and encouraging corporate disclosure on ESG issues. We are notably involved in the IIGCC (Institutional Investors Group on Climate Change), SSF (Swiss Sustainable Finance) and similar organisation in the UK, Germany and Spain.

 Pictet Group and / or Pictet Asset Management supports and actively participates in international and national initiatives, organisations and partnerships including:

Organisation / Initiatives / Partnerships, Pictet's involvement,  year, and key areas of focus: 

• FNG, SpainSIF: Member, 2006 - Transparency on ESG
• UNPRI: Signatory, 2007 - Transparency on ESG
• Copenhagen Institute for Futures Studies (CIFS): Member, Research Partnership: Megatrends Research, 2007 - Interdisciplinary academic disciplines
• CDP: Member, 2007 - Carbon
• Swiss Climate Foundation: Corporate sponsor, 2008 - Climate
• Sustainable Finance Geneva (SFG): Institutional Partner (Pictet Group), President Strategy and Surveillance Committee, 2008 - Promotion of sustainable finance
• EFAMA (European Fund and Asset Management Association): Member of the Stewardship Market Integrity & ESG Investment Standing Committee, 2010 - Fund and Asset Management
• Climate Bond Initiative: Member of the Standards Board, 2013 - Climate
• IIGCC (Institutional Investors Group on Climate Change): Member of the Adaptation & Resilience Working Group, 2013 - Climate
• FTSE Environmental Markets: Member of the Advisory Committee, 2013 - Environment
• Swiss Sustainable Finance (SSF): Founding member, 2014 - Promotion of the integration of sustainability in the financial industry
• JP Stewardship Code: Signatory, 2014 - Stewardship standards
• Stockholm Resilience Centre (SRC): Research Partnership: Planetary Boundaries Framework (from 2014-ongoing), Mistra Biodiversity Finance programme (from 2022), 2014 - Core focus is to advance research in the frontier of biosphere-based sustainability science, applying a social ecological approach and resilience thinking
• Investment Association: Member of the Sustainability and Responsible Investment Committee , 2018 - Stewardship and Corporate governance
• Climate Action 100+: Collaborative Engagement, 2018 - Climate
• Access to Nutrition Initiative (ATNI): Signatory (Pictet Group), 2018 - Delivery of nutritious, affordable foods.
• Empower: Partnership, 2019 - Youth at Risk
• UNEP Finance Initiative: Signatory (Pictet Group), 2019 - Environment
• Task Force on Climate-related Financial Disclosures (TCFD): Signatory, 2020 - Consistent climate-related financial risk disclosures
• FAIRR: Member, 2021 - Animal agriculture
• ICGN (International Corporate Governance Network): Member, 2021 - Governance
• Science Based Targets Initiative (SBTI): Signatory (Pictet Group), 2021 - Climate
• Net Zero Asset Managers Initiative: Signatory (Pictet Group), 2021 - Climate
• ESG Data Convergence Project: Steering Committee member (Pictet Group), 2021 - ESG metrics
• UN Principles on Responsible Banking: Signatory (Pictet Group), 2021 - Sustainable/responsible banking
• UK Stewardship Code 2020: Signatory, 2022 - Stewardship standards
• Institute of International Finance (IIF) : Research Partnership: Bonds that build back better, 2022 - Green, transition, social, sustainability & sustainability-linked bonds
• Responsible Investing Association (RIA): Member, 2022 - Canada's industry association for responsible investment
• Ceres Valuing Water Finance Initiative: Signatory (Pictet Group), 2022 - Water
• Finance for Biodiversity Foundation: Member (Pictet Group); participants in the Impact Assessment and Engagement Working Groups, 2022 - Biodiversity
• Taskforce for Nature-related Financial Disclosures (TNFD): Member of TNFD Forum (Pictet Group), 2022 - Risk management and disclosure framework on nature-related issues
• UN Global Compact: Signatory (Pictet Group), 2022 - Global sustainability principles

Source: Pictet Asset Management (April 2023)

Other industry associations:

Name, Involvement of Pictet Asset Management, Year and Scope

• Asset Management Association Switzerland (AMAS): Member (Pictet Group), Member of the Distribution, Taxes Specialist Committees , 1993 - Swiss Asset Management industry development
• German Investment Funds Association (BVI): Member, 2004 - German Asset Management industry development
• International Capital Markets Association (ICMA): Member, xxxx - Securities market

Furthermore, Pictet, together with Swiss Sustainable Finance, was leading an initiative to put pressure on index providers to remove controversial weapon manufacturers from mainstream indices. The initiative, launched in August 2018, secured the backing of 174 signatories controlling over USD 9.7 trillion and including international asset owners and managers (as of January 2020). This initiative has now been closed due to inclusion of controversial weapons exposure disclosures in draft RTS and EU Benchmarking regulation.

Literature

• Fund overview & literature (including factsheet)
• PAM Responsible Investment Policy

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Last amended: 21/06/24 09:58