Posted inESG

Jupiter fund skips fossil fuel sector

New exploration undermines companies’ role in sustainability transition, says fund manager.
Abbie Llewellyn-Waters, Jupiter Asset Management

Jupiter Asset Management head of sustainable investing has said the Global Sustainable Equities fund will only consider fossil fuel holdings when oil and gas companies stop financing new exploration.

The Jupiter Global Sustainable Equities fund SICAV was launched in September, and it is the equivalent of the fund by the same name which has been available in the UK since 2018. The SICAV is available to institutional and professional investors in Hong Kong and Singapore, and it will likely be made available to retail investors in Hong Kong in the first half of 2022.

Fund manager and Jupiter head of sustainable investing, Abbie Llewellyn-Waters, spoke about the fund strategy which demands companies have actionability and the irreversibility built in to their climate strategy.

No fossil fuel companies have yet met the criteria, she said. “I think we will see credibility in that sector when they stop financing new exploration.

“When all of their group’s pipeline is about decarbonisation – and they run existing assets, fine, I would anticipate those choices to be made – but we would like to see no further allocation to new fossil fuel exploration in order to be irreversibly positioned to decarbonize on a 30-year forward basis,” said Llewellyn-Waters.

Transition criteria

She explained fossil fuel companies have not been excluded from the fund but the forward-looking nature of the strategy seeks the high quality companies leading the sustainable transition.

“And that is through how they balance the planetary needs and how they operate within those planetary bounds. [We look at the company’s] people, from an inclusivity perspective and social equity perspective. And [we also look at] the resilience of their operations from a profitability perspective

“We bring all of those stakeholders together and we have yet to find conviction in a fossil fuel company that is positioned to deliver that transition,” commented Llewellyn-Waters.

Timeframe tensions

The fund manager also spoke about the difficulties within companies when it comes to reconciling a 30-year climate strategy with the typical tenure of a CEO which stands at around seven years.

Llewelyn-Waters described how Jupiter gauges if a company is tackling this tension sufficiently: “It is about actionability and we define actionability on whether or not they have short-, medium- or long-term targets. And we also look at the irreversibility of targets as well. That’s really key for us.”

In February 2021, Llewelyn-Waters wrote for ESG Clarity that clients are looking to see companies are taking timely action too: “The rate of acceleration with regards to this development is significant. Clients are becoming aware that their decisions matter to the future of the planet and the people on it. How clients are positioned during the transition to net zero will play an increasingly important role in determining which companies succeed, and how well they perform in the long term.”

Part of the Mark Allen Group.