Liontrust Sustainable Future Funds - Annual Review 2017 - Page 22



Affordable and clean energy (SDG #7)
Decent work and economic growth (SDG #8)
We have three main themes aligned with achieving this
SDG to ensure access to affordable, reliable, sustainable
and modern energy for all.
We have one theme aligned to the development goal to
promote sustained, inclusive and sustainable economic
growth, full and productive employment and decent
work for all.
Access to affordable,
reliable, sustainable and
modern energy for all
Increasing electricity generation from renewable sources:
Substituting coal intensive fossil fuel electricity generation
with renewable power sources reduces carbon emissions
as well as providing a cost-effective means to connect
people to cheaper, more reliable power sources.
Accelerating the transition to lower carbon fuels:
Companies that provide services or equipment,
particularly in upgrading the power grid network to deal
with changing production and consumption patterns
of electricity are an important requirement to achieve
affordable clean energy.
Improving the efficiency of energy use: We see many
ways of making energy cheaper by reducing waste
while also reducing emissions through more efficient use
of energy. This cuts across many areas of the economy
and includes building insulation, efficient lighting, energy
efficient climate control, travel and industrial processes.
Impacts: carbon intensity
Analysis shows our funds continue to emit significantly less CO2 – 70% on average – from their operations than
their benchmarks.
Sustainable Future Funds: Carbon emissions versus mainstream benchmarks
SF UK Growth
SF European Growth (x UK)
SF Global Growth
SF Corporate Bond Fund
Simple Average (inc SFCB)
Increasing financial resilience: We believe a resilient
financial services sector is necessary for economic wellbeing through utility-like provision of banking, lending
and effective ways of appropriately saving for the
future as well as mitigating risks through insurance. This
does not mean any company in the financial sector
is automatically investable but we do see positive
ways that these companies contribute to society when
appropriately and proactively managed. This is aligned
with KPI 8.3 to encourage growth of business through
access to financial services.
We believe a resilient
financial services sector is
necessary for economic
well-being
In addition to these, we also have exposure to:
•• Zero hunger (SDG# 2)
•• Quality education (SDG #4)
•• Clean water and sanitation (SDG #6)
•• Industry, innovation and infrastructure (SDG #9)
•• Sustainable cities and communities (SDG #11) and
•• Responsible consumption and production (SDG #12).
-65%
-66%
-76%
-73%
-70%
Source: MSCI ESG Carbon Analytics Report 01.03.18 using holdings data as at 31.12.17. The measure for this analysis is Total Carbon
Emissions (tCO2e /$m invested) for the Sustainable Future funds relative to their conventional benchmarks
While this kind of analysis has some shortcomings – failing
to capture the emissions from the use of products or services
the companies provide, for example – it is a useful starting
point to see how funds compare on CO2 emissions.
Our investment approach to carbon risk uses a
combination of:
•• Actively avoiding carbon-intensive businesses (as we
believe their future profitability to be overestimated
by the market) – we do not invest in the primary
extraction of fossil fuels such as coal, oil or natural
gas, airlines or auto manufacturers.
•• Actively looking for exposure to profitable businesses
that are providing solutions to help emit less pollution.
The latter is not captured in the CO2 emission analysis
but we disclose exposure to over 20 different structural
investment themes that are not just limited to carbon
dioxide and climate change.
Investing in companies that emit less CO2 than their
benchmark means the Funds are better positioned to
withstand any carbon cost inflation as they will have
less additional costs to pass on to their customers. In
short, the companies in the Funds have margins that are
more resilient to emissions regulations, which we see
becoming tighter over the medium term.
•• Seeking out the best operationally managed
companies that are proactively running their business
to mitigate expected increased regulation to make
big emitters pay.
22 Liontrust Sustainable Future Funds: Annual Review 2017
Liontrust Sustainable Future Funds: Annual Review 2017 23





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