Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
First Sentier Investors launches property fund with carbon focus
Global investment manager, First Sentier Investors, has launched an ESG-friendly property fund which has a built-in carbon overlay feature that allows for the comprehensive measurement and reporting of carbon emissions on all the underlying assets.
The fund has been accredited by the Responsible Investment Association of Australasia (RIAA). The fund’s carbon overlay works by analysing the gas emissions of the assets in the portfolio, both direct and indirect greenhouse gas (GHG). The fund is aiming to reach net zero emissions in the portfolio by 2040.
Head of Global Property Securities, Stephen Hayes, says the fund keeps a close eye on carbon emissions via the assets in the portfolio. The portfolio consists of listed real estate assets from self-storage to data centres and logistics.
Hayes says, “Approximately 40% of global greenhouse gas emissions come from the real estate sector, so if we are to limit global warming to 1.5 degrees, we need to reduce the sector’s carbon emissions from today. Our team has developed an innovative, robust process designed to measure both controlled and non-controlled operational and embodied GHG emissions in property assets, and we aim to better allocate capital to where the greatest carbon efficiency gains can be made.”
According to North Ridge Partners, an investment advisory business, globally data centres are responsible for two per cent of the world’s carbon emissions, on par with the aviation industry. The space is becoming more and more regulated, to try and reduce the huge level of emissions for which data centres are responsible. Typically, these are companies like, Facebook, Amazon, Google and Alibaba that operate cloud services.
Carbon emissions are generated by operations such as heating, cooling and lighting, as well the construction and demolition process. First Sentier’s Global Property Securities team have developed a proprietary methodology designed to capture both of these ‘operational’ and ’embodied’ emissions.
Hayes says, “To get the fuller picture of risks and opportunities, investors need to look at how companies are identifying, measuring, and acting on their carbon reduction and renewable energy ambitions, not just how they operate their assets. By integrating comprehensive environmental assessment into our investment process, we aim to value companies more accurately and mitigate any risks associated with environmental inaction.”
Hayes concludes by saying, “Comprehensive carbon measuring and reporting allows First Sentier Investors to decarbonise our real estate portfolio, at the same time as fostering change within the sector. Our extensive market engagement provides the landlords with information to assist them in implementing further their carbon efficiency programs and measure against peers.”
