Insights
Investment Process
- Initial Screening & Exposure Analysis
- Company Earnings and Balance Sheet Analysis
- Carbon Analysis (Hurdles and Targets)
- Investment Committee Review
- Portfolio Construction and Review
- The Sell Decision (exit price based on 5yr EPS and exit multiple)
Primary Data Sources
- Annual Reports and Investor Meetings Sustainability Reports
- Reporting carbon emissions (vs 1.5c scenario)
- Understanding Scope 3 emissions
- Leading to Fund Carbon Intensity and Emissions disclosure
- Absolute and relative to benchmark
- Scope 1&2 with estimate Scope 3
ESG Analysis
- Proprietary ESG ranking tool (A-E)
- Assess short term risks vs long term opportunities
- Use of third party rating agencies (MSCI ESG, Sustainalytics, CDP)
Engagement
- Average 4-6 management/Government meetings per company per year
- Executive compensation tied to targets
- Tackling of delivered emissions
- Capitalising on Clean Energy opportunities
Why partner with First Net Zero European Equity?
“Achieving net-zero by 2050 may well prove to be the largest allocation of capital in history”
McKinsey & Co, Aug 2022
Unparalleled EU and Private Stimulus
Over €4trn of EU, Member State and private capital to be allocated to Net Zero targets in next 5 years (Goldman Sachs, Feb 2023).
Primary Data Sources
Rising order books, revenues, earnings of companies that install and service Green Capex in utility, industrial, material, real estate and auto sectors and enable energy efficiency gain for all businesses and consumers.
Investors slow to reflect in valuations across industrial supply chains
Equity valuations remain unresponsive to rising earnings growth rates as Energy Efficiency moves from ‘nice-to-have’ to ‘mission-critical’ in supply chains.
Current investment product offering appears ‘greenwashed and generic’
Current investment products concentrated in only a subset of pure-play verticals or ‘greenwashed’ ESG funds. SFDR to scrutinise the shelf.
Private Capital
Project Selection
Asset Class
Member State
Return Profile
Wind
Solar
Hydrogen
Storage
Other
15% IRR Hurdle
Access to Funding
Project Leverage
Project Maturity
Carbon
Tracker
Carbon
Tracker
Parts per million CO2 in the atmosphere