Looking for companies that can contribute to the decarbonisation of the European economy. That’s the mission of Echiquier Climate Impact Europe, a new impact fund of la Financière de L’Echiquier (LFDE). Remarkably, the fund mostly invests in established European companies.
Echiquier Climate Impact Europe was only launched in December 2020, so it has not yet built a track record. However, one of its managers, Luc Olivier (photo), is optimistic about future prospects: ‘The philosophy of the fund is to look for listed companies in Europe that can contribute to climate neutrality in Europe. As investors, we want to be part of the green wave that is sweeping across Europe. In each economic sector, we look for companies that can make a positive contribution. Within LFDE, we have developed an internal and innovative methodology that allows us to define a Climate Maturity score for all companies.’
Solutions and Pioneers
The companies in which the fund invests can be divided into three categories: ‘First, companies that deliver Solutions through their products and services. This is the case, for example, for renewable energy, green mobility, etc. They represent about 30 percent of the portfolio.
The second category is the Pioneers. ‘These are companies that are pioneers in the field of climate change and can influence their customers, competitors and other stakeholders. They form an entire ecosystem. Here, for example, we find companies in the luxury sector, consumption and health care. They represent about 50 percent of the portfolio.’
The final category consists of companies that are in a Transition phase. ‘The management team can help these companies to evolve further. About 20 percent of the portfolio is invested in these companies.’
100% Europe
The fund invests for 100% in European companies. Olivier says: ‘This allows us to invest in the theme of carbon neutrality in Europe. We find many interesting companies in Europe in this field. Of course, they also have a lot of impact outside the continent. Air Liquide, a French company specialising in industrial gases, is a good example of a mature player with a global footprint.’
‘We are optimistic,’ notes Olivier. ‘Indeed, last year, for the first time, we produced more renewable energy than fossil energy in Europe. That is unique in the post-industrial era. Moreover, investments in renewable energy exceed those in fossil fuels. In the future, we will also see China and the United States catching up. They are currently lagging behind, but the movement is underway.’
Biodiversity
The fund manager says it has no direct competitors. ‘We think our positioning is unique and in line with the objectives of the Green Deal in Europe. We think it is the only fund that also takes biodiversity into account.’
Biodiversity is also an important criterion. It accounts for about 15% of the Climate Maturity score when the challenge is relevant. This is the case, for example, in the agri-food sector.
Another specific feature is that the Just Transition criteria are taken into account in the fund. This ensures that carbon neutrality in Europe manifests itself in a fair and balanced way. This mainly concerns the workers who will have to change jobs and who work in certain affected sectors.
‘An example is the Finnish company Neste, which is in a transition phase to renewable diesel. The company, which we have in our portfolio, has initiated the transformation in its sector and is actively moving from refining diesel to producing renewable diesel. The training of its employees and a good restructuring policy are at the basis of this Just Transition,’ says Olivier.