Lombard Odier Plans Climate Transition Fund With $260 Million

(Bloomberg) --

One of Switzerland’s oldest private banks is entering a tiny niche in the crowded world of ESG investing. Its approach: Find those companies which adjust their business models toward sustainability rather than simply ignoring them.

Lombard Odier Group’s asset management unit is launching a fund based on its new climate transition strategy. Notably, it will target companies in carbon-intensive industries, including base metal production and chemicals, that are leading the way on transitioning their business models.

The fund raised about $260 million ahead of launch, a company spokeswoman said via email.

The Geneva-based bank joins a crowded market. Funds that focus on environmental, social and governance investment principles have ballooned in recent years with more than 1,000 opening since 2015.

However, while assets in sustainable investment strategies rose to $30.7 trillion in Europe, the U.S., Japan, Canada, Australia and New Zealand, the most popular approach is still negative screening, which means excluding so-called offenders from funds. Only a fraction of institutional money invested in ESG strategies is focusing on companies that are trying to change their business models toward a more sustainable use of energy.

“Investors have trillions at stake in this climate transition, which we believe will create significant value and fundamentally shape portfolio outcomes in the years to come,” Hubert Keller, chief executive officer of Lombard Odier Investment Managers, said in an emailed statement. The new strategy “represents one of several important steps we are taking across the firm to align all portfolios and capture the investment opportunities arising from climate transition.”

The fund will invest in equities, though the bank hopes to expand the strategy across asset classes in the future. Lombard portfolio managers Paul Udall and François Meunier will take charge of the climate transition strategy underpinning the fund, while Didier Rabattu, the bank’s head of equities, will act as “challenger,” overseeing its performance and pushing the managers on its positions.

The Oxford Martin Principles for Climate-Conscious Investment are incorporated into the core of the fund’s strategy. LOIM will provide investors with a sustainability report on the climate impact of the fund’s companies.

To contact the reporter on this story: Greg Ritchie in London at gritchie10@bloomberg.net

To contact the editors responsible for this story: Tim Quinson at tquinson@bloomberg.net, Greg Ritchie, Andrew Reierson

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