Interview with Hajar Yousfi and Bastien Ducept, co-managers of CM AM Global Climate Change at Crédit Mutuel Asset Management.
What is the the DNA of CM AM Global Climate Change fund?
The climate emergency must taken care of now. To be in line with the objectives of the Paris Agreement, massive investments are needed. They are estimated at over 4,000 billion US dollars a year by 2030, or 20% of US GDP. Finance therefore has a crucial role to play as a vehicle for financing companies that are most active in finding solutions to accelerate the energy transition.
The CM AM Global Climate Change Fund invests for this purpose. It is one of the few international equity funds to have obtained the green label of the Ministry of Environmental Transition, guaranteeing respect for its theme and its commitment.
The CM AM Global Climate Change Fund is an Impact fund and we are pleased to have managed to keep it SFDR Article 9 : 100% sustainable investments.
What is your investment universe and what are the constraints of the fund?
The fund's universe is made up of international stocks that are actively involved in the fight against global warming and in the energy transition. The Label Greenfin defines the 8 areas of our investment universe: Energy, construction, circular economy, industry, transport, information and communication technologies, agriculture (including forests) and adaptation to climate transition. Our global expertise allows us to invest in the most relevant companies in our theme.
The Greenfin label also results in almost total exclusion from the nuclear and fossil energy sectors. Taking these different extra financial filters into account is a guarantee of the seriousness of our approach which is validated each year by an external audit confirming compliance with the Greenfin Label. The fund managed to retain its label in September 2022.
What sets the CM AM Global Climate Change Fund apart?
CM AM Global Climate Change is a global equity fund, allowing it to invest in leading companies in their segments worldwide. The fund is already in line with the Paris Agreement with a path of 1.5 degrees, significantly below its comparative index, the MSCI All Country World, at 3C°. The fund is rated 9.4/10, among the best of its peers, according to MSCI ESG for the quality of its extra financial methodology.
What is the outlook for the coming years and how does the fund position itself?
The rise of rates does not stop the rise of the global temperature. 2022 has been one of the hottest five years in history. The conflict in Ukraine led to a surge in fossil fuel prices and raised States' awareness of the importance of energy independence.
For example, many countries have accelerated renewable energy and energy efficiency investment plans to reduce fossil fuel dependency. Key government plans include the Inflation Reduction Act in the US, the Net Zero Industry Act for the EU and China's 14tenth Five Year Plan. We are entering a super investment cycle. These hundreds of billions of euros are a real turning point for the transition, driven by a clear regulatory framework giving visibility (tax credits over many years, eligible sectors) and the investments needed to accelerate the competitiveness of renewables, especially for hydrogen and battery energy storage.
These plans led the International Energy Agency (IEA) to revise these forecasts for renewable installations up by 30% over the period 2022-2030. They are expected to grow by 2 GW over this period, becoming the world's largest source of electricity generation as from 2025, and to represent 38% of the world's energy mix by 2027.
Many of the names in the CM AM Global Climate Change fund are benefiting from these catalysts .
in Europe, the fund is invested in Schneider Electrique, a leader in energy management. In the US, he has holdings in a number of leading solar companies, including SolarEdge, which is expected to benefit from an industry growth of over 28% in 2023. The fund is also invested in companies exposed to the repatriation of the value chain of the electric vehicle on US soil with General Motors, the largest North American manufacturer. In China, the fund built a position in Nari Technologies, an electrical transmission company essential for renewables to connect to China's power grid.