State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), has launched the World TPI Climate Transition Index Equity fund.
Combining the Transition Pathway Initiative’s (TPI) forward-looking assessments and FTSE Russell’s climate data and analysis, this new fund offers investors broad-based exposure to an ESG screened equity index, while capturing the risks and opportunities arising from the climate transition.
In addition to best-in-class data and negative ESG screens, this fund incorporates TPI’s assessments on companies’ management quality and carbon performance against a series of indicators. The assessments mean companies are incentivised to take genuine action and rewarded with increased weightings for their Task Force on Climate-related Financial Disclosures (TCFD)-aligned disclosures and commitments.
This UK-domiciled fund expands the firm’s ESG offerings for UK pension schemes and master trusts, offering them the opportunity to significantly improve their portfolio’s climate credentials. It has secured investment from specialist and independent wealth manager Kempen Capital Management.
“As a supporter of the TPI, we are excited about this new fund which offers investors a more sophisticated path to drive change than disinvesting from entire sectors and provides the opportunity to significantly improve their portfolio’s climate credentials,” says Carlo Funk, EMEA Head of ESG Investment Strategy for State Street Global Advisors. “The use of TPI’s assessments means investors are encouraging companies, particularly those in the most carbon intensive sectors, to take action to plan and work towards aligning their businesses with the Paris Agreement.”
Nikesh Patel, Head of Investment Strategy at Kempen Capital Management, says: “We are pleased to be the seed investor of this fund, which uses a new and exciting approach to assess the climate transition readiness and willingness of companies to be Paris Aligned. Climate change poses a systemic risk to the economy, society and the environment. Since investors play a key role in driving the low-carbon transition and reducing the climate risks of the companies they invest in, Kempen want to clearly identify the investment risks and opportunities associated with the climate transition economy for our clients.”
Alistair Byrne, Head of UK Institutional Distribution at State Street Global Advisors, adds: “Pension schemes and master trusts in the UK are actively seeking means to gain exposure to the opportunities that companies can generate from the transition to a low- carbon economy. This fund offers an index-based solution within a life wrapper for pension funds seeking greater alignment to the goals of the Paris Agreement, enabling them to immediately improve their portfolio’s carbon profile and reduce climate risk, while maintaining target returns.”
Adam Matthews, Chair of Transition Pathway Initiative, says: “Absolutely delighted to see the launch of this fund. Pension funds want solutions that manage the risk and opportunities posed by climate change as well as credibly supporting the transition to a low carbon economy. We have the insights to differentiate between companies that are genuinely starting to transition and those that are not. This fund incentivises positive change whilst addressing transition risk.”
