Through its 4Change Climate fund range, Rothschild & Co aims to offer investors dynamic low-carbon investment solutions and, therefore, contribute to diverting capital flows towards companies from all sectors – including those producing most Greenhouse Gas (GHG) emissions – and that have already undertaken the green transition.

With the development of 4Change Climate Funds, minimum quantitative standards were set.  They have been approved by the Autorité des Marchés Financiers (AMF) and were mentioned as examples during the sustainable finance workshops of the 2020 RCCI, a training day for compliance and internal auditors. The 4Change Climate Funds are certified with the French ISR Label. For this specific fund range, monitoring the carbon reduction trajectory is a core and contractually binding component of the fund management:

• Carbon intensity of Climate 4Change Funds must be 20% lower than the benchmark and comply with an annual average decrease of 5% by 2030;
• To achieve these objectives, we will assess portfolio companies’ carbon reduction trajectories, sell positions in companies that do not meet their commitments and perform additional arbitration.

This fund range relies on several innovative aspects:

• Methodological: obligation to hold a minimum share of polluting sectors to prove and respect the “green transition” objective of the fund;
• Legal: one of the first legal documents with strong commitment to integrate clear quantitative ESG targets and minimum coverage requirement for net assets (by percentage)
• High level of transparency on carbon data: a minimum coverage rate to be respected for emissions information;
• Extra-financial reporting validated by the regulator while the legal documentation is being negotiated.

Rothschild & Co Asset Management Europe redistributes part of its management fees to the NGO Up2Green to contribute to actions supporting both biodiversity and development of natural carbon sinks.

Listed below are some technical characteristics of the fund range:

• Strengthened ESG selection criteria for stock-picking:
  • Exclusion of companies involved in new “thermal coal” projects;
  • Exclusion of the lowest 20% of companies presenting the worst ratings based on extra-financial criteria (ESG rating);
  • Reinforced selection for the most polluting sectors: exclusion of the lowest 20% of companies presenting the weakest transition strategies towards a low-carbon economy.
• Monitoring of the funds’ carbon intensity (scopes 1 and 2) that should:
  • Be 20% lower than benchmark;
• Have annual average reduction trajectory of 5% by 2030