The Nanuk New World Fund is a responsible, sustainably themed, ESG and ethically aware fund which allows investors to access to a well-diversified portfolio of listed global companies whose business activities and practices benefit from, or contribute to, greater global environmental sustainability and resource efficiency. The Fund seeks to provide investment returns which exceed the Fund’s benchmark and outperform traditional / mainstream global equity benchmarks over the long term. The Fund provides clear non-financial outcomes through ethical and ESG related exclusions, and through the higher than average contribution of investee companies to the delivery of basic needs for global sustainable development. Positive (inclusionary) and negative (exclusionary) screening and ESG integration is utilized within a conventional, valuation based, active, fundamental investing approach.
Responsible & Sustainable Investing. The Nanuk New World Fund employs a “core” sustainable investment strategy which seeks to achieve a combination of financial and non-financial outcomes - specifically, by providing sound risk-adjusted financial returns which are aligned with Nanuk's responsible, social and ethical values. The Fund utilises positive (inclusionary) screening, negative (exclusionary) screening, integrates ESG factors into the decision-making process and is aligned with the "basic needs" that underpin the UN's Sustainable Development Goals.
Fund Objective. The long-term objective of the Fund is to outperform traditional global equity performance benchmarks such as the MSCI All Countries World Index. The Fund's formal benchmark is the FTSE-Russell Environmental Opportunities All Share Index.
Positive Screening. Positive (inclusionary) screening associated with Environmental (E) factors is intrinsic to the firm’s investment approach. To be included in Nanuk’s investable universe and portfolios, companies must derive at least 25% of their value from activities within these eight sectors, ensuring that a material proportion of each investee company’s activities are contributing in a clear way to improving global environmental sustainability and resource efficiency. Nanuk's proprietary investment universe is defined around eight broad sectors: 1) Clean Energy, 2) Energy Efficiency, 3) Industrial Efficiency, 4) Waste & Pollution, 5) Food & Agriculture, 6) Advanced & Sustainable Materials, 7) Water and 8) Healthcare Technology.
Negative Screening. Nanuk’s focus naturally precludes investment in many industries that do not align with the firm’s values and sustainability focus and in companies whose practices are known to contravene environmental, social and ethical norms. Nanuk’s exclusions framework is applied in combination with the inclusive positive screening process such that companies must pass both tests to be included in Nanuk’s investable universe and portfolios. Company exclusions are formalised around around three main areas: 1) Climate Change, Fossil Fuels & Environment, 2) Weapons, and 3) Ethical Values & Human Rights. The key sectors within each of these areas are outlined below:
- Coal & Coal-Based Energy, Oil & Gas, Uranium & Nuclear Power, Severe Environmental Damage
- Cluster Munitions and Anti-Personnel Landmines, Nuclear Weapons, Defense-Specific Contracting & Equipment, Weapons & Small Arms
- Adult Entertainment, Alcohol, Correctional Facilities, Gambling, Gross Corruption, Tobacco, Serious Violations of Human Rights & Ethical Norms.
Aligned with its intention to assist in the global transition to greater environmental sustainability and resource efficiency, Nanuk’s exclusions framework is constructed in a pragmatic manner and will permit investment in the following circumstances: a) where a company is making a positive contribution to improving global sustainability and resource efficiency yet may have indirect involvement in contentious areas, and b) where a company’s involvement in, or transition towards, sustainable technologies and practices outweighs limited involvement in contentious areas and/or activities. Nanuk does not invest in companies having a material proportion of their primary business activities in contentious areas specified in the table above and which are not involved in the transition to environmental sustainability and resource efficiency. The specific exclusion definitions and thresholds are outlined below.
Sustainable Development. The activities of companies within Nanuk’s proprietary investment universe typically demonstrate a clear connection with the delivery of the UN’s Sustainable Development Goals (SDG’s) and the ‘basic needs’ that underpin them. Nanuk utilizes the services of an independent research house to analyse company and portfolio sustainability risk and contributions to the delivery of basic needs which underpin the UN’s SDGs – for example, in areas such as food, health, transport, energy and waste. Mapping of portfolio company activities to basic needs, and then to the UN SDG’s, shows the largest SDG contributions in the Nanuk New World Fund (as at Feb 2019) were made in the following areas:
- Affordable & Clean Energy
- Sustainable Cities & Communities
- No Poverty
- Good Health & Wellbeing.