Carlos joly


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Carlos joly

  1. 1. Integrating climate change in a global listed equities portfolio Carlos Joly, chairman of the climate change Scientific Advisory Committee of Natixis Asset Management TBLI, London 11.11.2010
  2. 2. Why the urgency ? GHG emissions pose unacceptable risk The challenge : reduce world greenhouse gas emissions by 50% by 2050 compared to the 2000 level 2009 : 430 ppm CO ² (e) “  business as usual ” scenario = + 2.5 ppm per year Only 70 ppm CO ² (e) left More than 500 ppm CO ² (e): risk of catastrophe 2040: 500 ppm CO ² (e)
  3. 3. Why isn’t climate change being integrated in portfolios? <ul><li>Investors don’t believe climate change is material yet </li></ul><ul><li>Don’t know how to do it </li></ul><ul><li>Asset managers are not being asked, so don’t </li></ul><ul><li>Financial crisis has put stopper on innovation </li></ul><ul><li>Makes no difference to passive investors </li></ul>
  4. 4. How does climate fit in? <ul><li>Climate change risk generally not in price of equities or bonds </li></ul><ul><li>Climate change is real, already present, and affecting the economy of nations. Impacts will get bigger </li></ul><ul><li>CO2 obeys the laws of nature, not electoral politics </li></ul><ul><li>Adaptation to impacts and reduction of GHG our only hope </li></ul>
  5. 5. Ways of integrating climate change in portfolio management <ul><li>Adjust stock and bond indices for carbon emissions of index constituents </li></ul><ul><li>Drawbacks: penalizes cement, steel, alum, etc sectors that use lots of energy. These sectors key to development in EM and necessary for housing, infrastructure, railways, etc. </li></ul><ul><li>Alternative Energy and “Envirotech” Funds </li></ul><ul><li>Drawback: thin markets, too much money chasing too few names, niche sectors prone to bubble and bust cycles </li></ul><ul><li>Comprehensive approach using climate change analysis along with sector and fundamental company analysis Pioneered by Natixis Asset Management and few others </li></ul><ul><ul><li>Drawback: doesn’t work with passive. Needs longer term horizon for performance payoff. Institutional investors want short term verification and have low tolerance for deviations to indices. </li></ul></ul>
  6. 6. Impact Funds - Climate Change : a comprehensive approach broad spectrum of sub-themes and sectors <ul><li>This is example of a </li></ul><ul><li>pioneering approach </li></ul><ul><li>launched year ago </li></ul><ul><li>in France with €100m </li></ul><ul><li>Fund has a scientific advisory committee for thematic input </li></ul><ul><li>Chair: Carlos Joly </li></ul>1. Mitigation : reduction in greenhouse gas emissions Energy substitution (lower carbon energy, alternative energy) Transport Efficiency Building efficiency Modernization of power plants 2. Adaptation to the inevitable consequences of climate change Changing consumer behaviour Cover against extreme events Adaptation of infrastructure 3. Better management of natural resources Waste manage-ment Water manage-ment Soil manage-ment
  7. 7. Impact Funds Climate Change investment process Global equities universe (30,000) NAM equities coverage (1,500+) <ul><li>Quantitative filter </li></ul><ul><li>Qualitative/strategic analysis </li></ul><ul><li>Financial analysis </li></ul>Portfolio <ul><ul><li>1 – Mitigation </li></ul></ul><ul><ul><li>2 – Adaptation </li></ul></ul><ul><ul><li>3 – Management of natural resources </li></ul></ul>Carlos Joly Scientific Committee PM and equities team PM External: Sell-Side External: IPCC, EU, NGOs, academic studies, etc. Exclusion of worst offenders <ul><li>Combination of thematic inputs & bottom-up expertise </li></ul><ul><li>Themes define investment universe: solutions to MAM </li></ul><ul><li>Companies are assessed qualitatively (products, positioning, strategy, management, financials) </li></ul><ul><li>and quantitatively </li></ul><ul><li>Strong convictions: only stocks fulfilling both thematic and financial criteria are eligible </li></ul>Analysis Climate change thematic filter
  8. 8. Portfolio breakdown as of Oct 31st 2010 <ul><ul><li>Assets: $137 Million </li></ul></ul><ul><ul><li>Equity exposure: 96% </li></ul></ul><ul><ul><li>Number of countries: 20 </li></ul></ul><ul><ul><li>Number of holdings: 71 </li></ul></ul>Source: Natixis Asset Management *Breakdown of the part invested in equities (i.e. 96% of the portfolio). Capitalization breakdown* Thematic breakdown*
  9. 9. Portfolio breakdown as of Oct 31st 2010 <ul><ul><li>Emerging exposure : 17% </li></ul></ul>Geographical Breakdown* Sector Breakdown* Source: Natixis Asset Management *Breakdown of the part invested in equities (i.e. 96% of the portfolio).
  10. 10. Performances as of Oct 31st 2010 Performance I Share EUR Since Inception (5th of October, 2009) +14.30%
  11. 12. Natixis Asset Management Registered Office: 21 quai d’Austerlitz – 75 634 Paris Cedex 13 – Tel. +33 1 78 40 80 00 Limited Liability Company, Share Capital 50 434 604,76 euros Regulated by AMF under n°GP 90-009 RCS Number 329 450 738 Paris Natixis Multimanager Registered Office: 21 quai d’Austerlitz – 75 634 Paris Cedex 13 – Tel. +33 1 78 40 32 00 Regulated by AMF under n°GP 01 054 A French simplified joint-stock company Share Capital of 7 536 452 euros RCS Number 438 284 192 Paris This document is destined for professional clients. It may not be used for any purpose other than that for which it was conceived and may not be copied, diffused or communicated to third parties in part or in whole without the prior written authorization of Natixis Asset Management. None of the information contained in this document should be interpreted as having any contractual value. This document is produced purely for the purposes of providing indicative information. It constitutes a presentation conceived and created by Natixis Asset Management from sources that it regards as reliable. Natixis Asset Management reserves the right to modify the information presented in this document at any time without notice and particularly the information concerning the description of the management processes which does not in any way constitute a commitment on behalf of Natixis Asset Management. Natixis Asset Management will not be held responsible for any decision taken or not taken on the basis of information contained in this document, nor in the use that a third-party may make of it. Figures mentioned refer to previous years. Past performance does not guarantee future results. Reference to a ranking and/or a price does not indicate the future performance of the UCITS or the fund manager. The funds mentioned in this document have received the approval of the French Financial Market Authority (AMF) or have received authorization to be marketed in France. The risks and costs related to investment in a fund are described in the fund’s prospectus. The prospectus and the periodical reports are available on request from Natixis Asset Management. Potential subscribers must be in possession of a copy of the prospectus before making any subscription.  In the case of funds that qualify for a special tax status, we remind potential investors that the special tax conditions depend on the individual situation of each customer and that such conditions may be subject to future modification. Under Natixis Asset Management’s social responsibility policy, and in accordance with the treaties signed by the French government, the funds directly managed by Natixis Asset Management do not invest in any company that manufactures sells or stocks anti-personnel mines and cluster bombs. Legal information
  12. 13. Additional notes This material has been provided for information purposes by Natixis Asset Management or one of the Natixis Global Associates offices listed below. Natixis Global Associates is the global distribution organization of Natixis Global Asset Management, the holding company of a diverse line-up of specialised investment management and distribution entities worldwide, each of whom conduct any regulated activities only in and from the jurisdictions in which they are licensed or authorized. Their services and the products they manage are not available to all investors in all jurisdictions. Although Natixis Asset Management and Natixis Global Associates believe the information provided in this material to be reliable, it does not guarantee the accuracy, adequacy, or completeness of such information. In the U.K.: This material is approved and provided by Natixis Global Associates UK Limited which is authorised and regulated by the UK Financial Services Authority (register no. 190258). This material is intended to be communicated to and/or directed at persons (1) in the United Kingdom, and should not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell securities in any other jurisdiction than the United Kingdom; and (2) who are authorised under the Financial Services and Markets Act 2000; or are high net worth businesses with called up share capital or net assets of at least £5 million or in the case of a trust assets of at least £10 million; or any other person to whom the material may otherwise lawfully be distributed in accordance with the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or the (Promotion of Collective Investment Schemes) (Exemption) Order 2001 (the &quot;Intended Recipients&quot;). To the extent that this material is issued by Natixis Global Associates UK Limited, the fund, services or opinions referred to in this material are only available to the Intended Recipients and this material must not be relied nor acted upon by any other persons. Registered office: Cannon Bridge House, 25 Dowgate Hill, London, EC4R 2YA. Any analyses and opinions referenced herein represent the subjective views of the portfolio manager(s) as referenced. These, as well as certain of the investment themes and processes, and the portfolio holdings and characteristics, are as of the date indicated and are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material. This material is not a prospectus or offering memorandum and does not constitute an offer of financial services, nor a recommendation or an offer to buy or to sell shares in any financial instrument. Investors should consider the investment objectives, risks and expenses of any investment carefully before investing. If you would like further information about this fund, including charges, expenses and risk considerations, contact the sender of this document or your financial advisor for a free prospectus, simplified prospectus, copy of the Articles of Incorporation, the semi and annual reports, and/or other materials and translations that are relevant to your jurisdiction. If the fund is registered in your jurisdiction, these documents are also available free of charge from Natixis Asset Management ( ) or one of the Natixis Global Associates offices ( Please read the prospectus carefully before investing.