Luc Olivier

Against the current

The European continent could lose between 5 and 10 degrees Celsius within 100 years. This is one of the predicted consequences of the collapse of the Atlantic Meridional Overturning Circulation (AMOC). These ocean currents, which account for 10% of the Gulf Stream and help to regulate the global climate, are in danger of disappearing before 2095, according to the University of Copenhagen,[1] although the Met Office, the British meteorological service, does not see this happening in the 21st century. The timeframes may be different, but the conclusions are similar, and were confirmed by a Dutch study in February 2024:[2] extreme winters in the northern hemisphere, major climate disruption in Africa and Asia, and the disappearance of monsoons, replaced by severe droughts. The impact would be global, affecting all sectors. Aware of this challenge, asset management is making a commitment.

Chain reaction

The main cause of the collapse is global warming, which is intensifying the melting of glaciers and releasing large quantities of fresh water into the oceans. The mixing of these waters, with their different densities, causes ocean currents to slow down. This is a chain reaction of which greenhouse gas (GHG) emissions are a major cause. Alarmingly, GHG emissions rose by 62% between 1990 and 2022.[3]

For some asset managers, investing in solutions that reduce greenhouse gas emissions and protect ecosystems as a whole is the only choice. Listed impact investing addresses these challenges, and we believe it has a decisive role to play in attracting capital to companies committed to tackling the climate challenge.

Committed companies

The scale of the challenges means that all sectors of the economy need to be on board. This is already the case for sectors that are aware of the issue and pioneering companies such as Tomra, which is committed to the circular economy. This Norwegian company designs and operates packaging recovery and recycling systems, particularly for retailers. Aware of the vital role played by recycling in the climate transition, Tomra has set itself the target of doubling the greenhouse gas emissions avoided through its activities by 2030.

Sectors that may seem less sensitive to these issues, such as industry, are also getting involved. Through its products and services, Schneider Electric gives its customers the opportunity to reduce their energy consumption and in turn their CO2 emissions, a major component of greenhouse gas emissions. Aware of the need to involve the entire production chain, the French company has been developing circular solutions for over 15 years. Validated by the Science Based Targets initiative (SBTi),[4] Schneider Electric’s strategy is geared towards net zero emissions by 2050.

The need to adapt

In this context, adaptation to extreme temperature variations and climatic events must go hand in hand with energy-saving measures.

Identifying the risks caused by climate change is essential. The Getlink Group, which manages Eurotunnel, is a case in point. While contributing to low-carbon mobility, the Group is anticipating the inevitable rise in water levels and droughts caused by past and future CO2 emissions. With exemplary precision, this risk identification has led to the implementation of measures designed in particular to limit the impact of floods and droughts on the Channel Tunnel and its infrastructure. At the same time, the Group’s climate roadmap, validated by the SBTi as consistent with a 1.5°C scenario, includes Scope 3, in which the Group engages its suppliers by setting climate targets for them.

Alongside these committed companies, investors are coming together to increase their impact. The global Climate Action 100+ initiative,[5] which LFDE joined in 2020, brings together more than 700 investors. The aim is to ensure that the largest GHG-emitting companies take the necessary steps to combat climate change. Given the urgency of the situation, LFDE has placed these issues at the heart of a dedicated impact investing strategy. In 2022, the Echiquier Climate & Biodiversity Impact Europe portfolio contributed to saving 2,185 tCO2e.[6] We are convinced that action must be collective.

Disclaimers: The fund is exposed to the risk of capital loss, equity risk, small and mid-cap investment risk, currency risk and discretionary management risk. For more information on its features, risks and costs, please read the regulatory documents available at Investors are reminded that the units/shares presented may not be marketed in their country of residence. Investors’ attention is also drawn to the fact that the fund’s investments generate no direct impact on the environment and society but it does seek to invest in companies meeting precise criteria in their investment strategies. The opinions expressed in this document are the fund manager’s own. LFDE shall not be held liable for these opinions in any way. The stocks referred to are given by way of example. No guarantee is offered that they will be in the portfolio at any particular time.
[1] Nature Communications, 2023
[2] Science Advances, 2024
[3] United Nations
[4] Initiative designed to help companies reduce their CO2 emissions.
[5] For more information, click here
[6] Vs 1,279 tCO2e for its benchmark, MSCI EUROPE NR