Environmental fund of the year, Asia; and ESG investment initiative of the year: The Climate Impact Asia Fund
The Asian environmental fund of the year and ESG Investment Initiative of the year awards were scooped by the Climate Impact Asia Fund, a collaboration between London- and Singapore-based investment manager Milltrust and WWF Hong Kong.
The fund follows a long-only direct public equity impact investment strategy investing only in Asia-Pacific companies which enable the adaptation to, or mitigation of, climate change and transition to a low-carbon economy. It has six areas of investment:
- Recycling and environmental services;
- Low-carbon transport;
- Water and green consumption;
- Sustainable construction; and
- Energy management services.
It engages with these companies to also improve their ESG scores as judged against key performance indicators including energy consumption and output per plant for companies involved in wind and solar energy generation.
The fund has a "zero-tolerance" exclusions list which includes thermal coal mining and extraction, palm oil, ozone-depleting substances, nuclear production and oil sands extraction.
The fund also donates up to 40% of its fees to the biodiversity and species extinction conservation work done by WWF Hong Kong. The latter is also an environmental consultant on the fund, sitting on the investment committee to monitor its climate objectives and progress.
One of the projects supported by the fund is the Orangutan Protection Programme which is working to extend protected areas of the rainforest for wild orangutans under threat from habitat loss. This is largely being driven by logging, palm oil production, mining and agricultural expansion. The programme also supports the sustainable use of palm oil by manufacturers as well as engages with local communities to manage protected areas.
Milltrust's Impact Management Project framework also assesses the fund's impact by measuring company outputs and contributions to climate action as well as risk from climate-related issues. It also regularly reviews and maps the fund's alignment and contribution to the UN Sustainable Development Goals.
It has seen an annualised performance of 21% since its inception in 2020 and follows an inverse index ETF as well as an equity index. The indices are:
- Hang Seng USD
- Hang Seng China Enterprise (H Shares)
- MSCI Asia Pacific Index
- TOPIX Index.
Milltrust said this provides downside protection and lower volatility resulting in a lower correlation with the regional Asian equity indices. This provides a more sustainable return profile in the long term, it argues.
Alexander Kalis, managing partner at Milltrust who heads the fund, told Environmental Finance:
"We hope that, along with the fund's strong performance, these awards will attract due attention from investors who are looking to make a difference in tackling the significant climate and environmental threats we are facing today without sacrificing returns."