UBS Asset Management and Aon have launched the UBS Global Emerging Markets Equity Climate Transition Fund to help companies across developing economies transition to a low-carbon economy and deal with social issues.
An extension of the UBS Global Equity Climate Transition Fund launched last year, Aon’s defined contribution and defined benefit solutions will seed the fund with £190 million.
The strategy follows a “rule-based investment approach” to mitigate social and environmental effects with the UN Sustainable Development Goals of health, clean energy, decent work, responsible consumption and production and climate action.
The fund aims to apply positive and negative ‘tilts’ to emerging market companies compared to a broad emerging market index. This will target climate-related stocks aiming to decarbonise following the Intergovernmental Panel on Climate Change’s target of limiting warming to 1.5°C and reaching net zero CO2 emissions globally around 2050.
The asset managers will engage with companies’ management on best practices of sustainability reporting and promoting climate awareness across social themes like labour rights and inclusive growth.
Joanna Sharples, CIO of Aon DC Solutions, said: “Clients and members expect us to support the low-carbon economy in an innovative, cost-efficient way. But we couldn’t previously do that with our Emerging Markets exposure.”
Ian Ashment, head of portfolio engineering and trading at UBS AM, said: “The transition to a low-carbon economy is vital to reduce the risk of climate change, and this fund brings together our proprietary climate-aware framework and global stewardship program to collaborate with companies to work towards a lower carbon future, linking climate action with inclusive growth.”
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