AllianceBernstein (AB) has launched a new strategy, AB Global Low Carbon, as part of its Portfolios with Purpose platform. The new strategy aims to deliver a positive impact on climate change and improve investment returns by combining AB’s active approach and fundamental research with an innovative approach to carbon pricing.
AB Global Low Carbon is the newest addition to AB’s suite of low carbon equities strategies and follows the successful launch of Green Alpha in Australia—an Australian equities strategy launched by AB in 2018 which set a new standard in low-carbon investing in that market.
The new global strategy factors a carbon price into its valuation of companies. Through engagement with company management and using proprietary analysis of the physical and transition risks presented by climate change, the investment team is able to more effectively price stocks for the long term. This approach aims to not only provide smoother performance during periods of volatility, but to outperform the market over longer periods of time.
The strategy seeks to achieve approximately 90 per cent less emissions that the MSCI World Index. Over time and in simulations, the average carbon footprint for the Global Low Carbon strategy has been just 5 per cent of that of the index, significantly exceeding the fund’s target objective.
AB Global Low Carbon’s approach aligns with one of the prevailing trends in the industry – the transition to a low carbon economy. Governments, asset owners and corporates alike have made this a key priority, which has seen 121 countries and 398 cities pledging to achieve net zero emissions by 2050 and the formation of critical industry initiatives such as the Net-Zero Asset Owner Alliance.
The strategy is managed by Kent Hargis and Sammy Suzuki, co-CIOs Strategic Core Equities, who collectively have over 52 years of industry experience, and will be available to AB’s institutional clients. In managing the strategy, the investment team employs a disciplined, bottom-up investment process that uses AB’s proprietary fundamental and quantitative research to identify stocks.
Michelle Dunstan, Global Head of Responsible Investing at AllianceBernstein, says: “We are excited by this next step of expanding our Portfolios with Purpose platform, which also includes equity and credit strategies aligned with the UN SDGs, and other offerings across asset classes and regions.”
“Global Low Carbon is a perfect example of how we approach ESG at AB. We are using our active, high conviction approach and our fundamental, quantitative research to build a portfolio that has a demonstrable impact in fighting climate change. There is a growing onus on investors to play a stronger stewardship role in their investments, and by integrating these ESG considerations into the process, it is our intention to provide them with the opportunity to do so.”
Hargis adds: “The idea that low carbon equates to low return is outdated. In fact, the opposite is true. By fully understanding and pricing in the climate-related risks that may disrupt a company’s bottom line, we can choose our stocks more effectively, and provide a more stable and better performing portfolio.
“AB Global Low Carbon brings the same strength of research and portfolio management capabilities that have made our Strategic Core equity portfolios a success to create a solution for institutional investors which aims to deliver superior performance in terms of both climate change outcomes and investment returns.”
AB’s Global Low Carbon strategy is an actively managed, high-conviction equity portfolio designed to outperform global markets over a full market cycle. It aims to achieve a positive impact on climate change while emphasising downside mitigation and capturing most of the upside in rising markets.
