investment viewpoints

A real-life stress test for climate strategies

A real-life stress test for climate strategies
Nicolas Mieszkalski - Portfolio Manager

Nicolas Mieszkalski

Portfolio Manager
Alexey Medvedev, PhD - Portfolio Manager

Alexey Medvedev, PhD

Portfolio Manager
Cheick Dembele, CFA - Portfolio Manager

Cheick Dembele, CFA

Portfolio Manager

The events of last year proved a real-life stress test for climate strategies and demonstrated the need to carefully manage short-term risks. What lessons are we taking into 2023?


Need to know

  • The energy sector performed strongly in 2022. Consequently, allocation to this sector was a decisive and differentiating element of performance and risk among climate equity strategies
  • Disproportionate underexposure to energy, overexposure to information technology and bias towards growth stocks drove most of the underperformance of these strategies
  • Prudent portfolio construction with tight risk controls proved to be decisive in 2022, which made our strategy more resilient than our peers' and helped us to outperform climate benchmarks


The year 2022 has shown the need to carefully manage short-term risks. In 2023 we continue to take risk management seriously, seeking to allocate most of our tracking-error budget to a net-zero target, avoiding unintended exposures. We believe that our approach will allow our investors to benefit from climate transition opportunities in a smooth way.

Read our latest investment viewpoint using the button provided.

important information.


This document is issued by Lombard Odier Asset Management (Europe) Limited, authorised and regulated by the Financial Conduct Authority (the “FCA”), and entered on the FCA register with registration number 515393. Lombard Odier Investment Managers (“LOIM”) is a trade name.

This document is provided for information purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This material does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of LOIM and is addressed to its recipient exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. This material contains the opinions of LOIM, as at the date of issue. Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term “United States Person” shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income. Source of the figures: Unless otherwise stated, figures are prepared by LOIM. Although certain information has been obtained from public sources believed to be reliable, without independent verification, we cannot guarantee its accuracy or the completeness of all information available from public sources. Views and opinions expressed are for informational purposes only and do not constitute a recommendation by LOIM to buy, sell or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change. They should not be construed as investment advice. No part of this material may be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorised agent of the recipient, without Lombard Odier Asset Management (Europe) Limited prior consent. In the United Kingdom, this material is a marketing material and has been approved by Lombard Odier Asset Management (Europe) Limited which is authorized and regulated by the FCA. ©2023 Lombard Odier IM. All rights reserved.