Schroders is announcing the expansion of its Global Transformation Range of thematic funds with the launch of two new global equity funds, Schroder ISF[1] Circular Economy and Schroder ISF Sustainable Infrastructure.
These funds have been launched in response to investor demand and aim to help navigate some of the key sustainability challenges facing the planet.
SISF Circular Economy will be managed by Jack Dempsey and will aim to provide capital growth by investing in companies worldwide which contribute to the transition to a circular economy. The circular economy principle looks to decouple economic growth from resource consumption, a key sustainability and economic focus given increasing resource deficits.
By reducing non-renewable resource consumption, reducing waste and pollution, increasing levels of recycling and ensuring energy and materials are more sustainably used, companies can support the transition to a circular economy.
Jack Dempsey, Fund Manager of the SISF Circular Economy, Schroders, said:
“The global economy currently consumes close to two planet Earths’ worth of resources a year[2]. The imbalance between demand for resources and their supply is unsustainable and change is urgently needed. Shifting to a circular economy is essential to tackle this key challenge.
“The prize for companies that can close the resource gap is massive, estimated at c. $25 trillion by 2050[3]. Entire industries have the potential to be transformed. For example, clothing resales are expected to be bigger than fast fashion by 2029, and, as plastics come under increased scrutiny from consumers and regulators, more sustainable materials can gain market share.
“Through SISF Circular Economy, investors will be able to tap into a growing market for sustainable products and services, while also contributing to a more resilient and resource-efficient economy. This is vital since we see no path to net zero without a circular economy.”
SISF Sustainable Infrastructure will be managed by Ashley Thomas and will aim to provide capital growth by investing in companies worldwide which help to advance the development of global sustainable infrastructure assets, such as energy utilities, renewable energy, water and waste utilities, rail and communications infrastructure.
The fund’s investments will align with a number of UN Sustainable Development Goals (UN SDGs) including Affordable & Clean Energy, Clean Water & Sanitation and contribute towards environmental objectives such as Climate Change Mitigation and Adaptation.
Ashley Thomas, Fund Manager of SISF Sustainable Infrastructure, Schroders, said:
“Existing infrastructure networks are in urgent need of expansion and replacement as they will experience an unprecedented combination of pressures over the next 30 years. The OECD[4] estimates $6.9 trillion per annum of investment is required by 2030 to meet climate and development objectives.
“While investment in renewable energy has more than doubled over the past decade to around $600bn pa, grid investment has been static at around $300bn pa. However, to reach national climate goals, grid investment needs to double by 2030 with more than 80m km of grid length required to be built or replaced by 2040 – the equivalent of the entire existing global grid.[5]
“Critical investment gaps also exist when it comes to new water resources and waste water treatment, rail to support the decarbonisation of transport, and the telecommunication sector.
“SISF Sustainable Infrastructure is focused on supporting the UN SDGs including environmental improvements while allowing investors to benefit from the strong long-term growth potential inherent in this exciting investment theme.”
Both funds are recognised under Article 9 of the Sustainable Finance Disclosure Regulation and form part of Schroders’ Global Transformation Range, a suite of funds giving investors long-term exposure to the most powerful and persistent themes shaping the world’s future.
David Docherty, Investment Director, Thematics, Schroders, said:
“We are very excited about the launch of these funds, both of which will invest in companies with the requisite ingenuity to address critical global environmental challenges and, in so doing, seek to meet our clients’ performance and sustainability objectives.”
More information on both funds can be found on Schroders’ Global Fund Centre.
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[1] Schroder International Selection Fund
[2] https://unric.org/en/environment-2-august-overshoot-day-for-earths-resources/
[3] Source: Accenture The Circular Economy Could Unlock $4.5 trillion of Economic Growth, Finds New Book by Accenture | Accenture
[4] Investing in Climate, Investing in Growth | OECD iLibrary (oecd-ilibrary.org)
[5] Source: IEA Publications, International Energy Agency, 2023: Electricity Grids and Secure Energy Transitions (windows.net)