investment viewpoints
Private credit as a catalyst for net-zero
As the world faces the urgent challenge of climate change, there is a pressing need for innovative solutions to reduce carbon emissions and transition to a sustainable future. Versatile private credit is well positioned to play a key and differentiated role in accelerating the transition.
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A CLIC® economy
Our Sustainable Private Credit strategy is dedicated to investing in climate solution providers that are at the forefront of this economic transition and contribute to a broader societal shift to an economy that is Circular, Lean, Inclusive, and Clean (CLIC®).
In the strategy’s inaugural sustainability report, we will provide an overview of our investment strategy and sustainability approach and highlight the achievements of the strategy’s portfolio companies during the year 2022.
The role of private credit
As a forward-looking investor, our goal is to identify businesses that are mitigating climate risks and acting on the opportunities generated by the transition. We believe that there are significant opportunities available to advance the net-zero transition, and these opportunities will require more innovative and flexible solutions than commonly offered through traditional capital markets. We additionally believe that an aligned approach to private credit offers strong opportunities to provide additionality via stewardship and engagement, and to mobilise catalytic capital.
The broader consensus move to net-zero creates investment opportunities in select sectors targeted as priorities by large asset owners and corporations. While many large companies are creating meaningful in-house contributions to the climate transition, some of the most impactful solutions are coming from entrepreneurs within fragmented, under-financed markets working directly with corporate partners. Such corporate consumers of sustainable goods and services often find it more accretive to purchase and scale an externally sourced product or service than to allocate such development to balance sheet.
Focus sectors
The strategy seeks to support a climate transition and tackle the net-zero opportunity by financing both disruptive and experienced climate solution providers, primarily ones which operate in the industries depicted in figure 1.
Climate solution providers are companies that offer or enable a solution contributing to decreasing greenhouse gas emissions along with increasing climate resiliency and adaptation through the delivery of sustainable goods, services, or assets.
Figure 1: Portfolio distribution in focus sectors
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| Distributed renewables |
| 33.4% |
| Small-scale power resources including solar, often operating at the grid-edge |
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| Resource efficiency |
| 0% |
| Products/ services that allow for more efficient use of resources, such as energy efficiency and smart city technologies |
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| Storage & microgrids |
| 33.3% |
| Related to Distributed Renewables but with more focus on resilience and ability to operate power systems independently |
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| Energy transition |
| 0% |
| Products/services reducing carbon emission from established industries, including low-carbon transportation |
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| Waste to value |
| 0% |
| Used of waste for the creation of renewable chemicals, fuels, and agricultural products |
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| 33.3% |
| Digitalisation and other enabling activity |
| Providers and enablers of climate infrastructure particularly supporting the electrification of the economy and the deployment of mobile low-carbon infrastructure solutions such as 5G technology |
Case studies1
Our fiduciary duty
As an asset and wealth manager, we believe it is our fiduciary duty as stewards to understand and avoid risks while helping our clients capture the opportunities associated with the transition to a CLIC® economy. Our Sustainable Private Credit strategy uses a robust, proprietary, and science-based approach that we believe enhances our ability to calibrate risk and return as the transition unfolds. We also use our influence to engage with investees, seeking to strengthen business models, enhance environmental and social additionality, and catalyse follow-on investments.
For a copy of the full 2022 Annual Sustainability Report, please contact your investor relations representative or the Sustainable Private Credit Team's Business Manager at gene.getman@lombardodier.com
sources.
1 Important information on case studies
The case studies provided in this document are for illustrative purposes only and do not purport to be recommendation of an investment in, or a comprehensive statement of all of the factors or considerations which may be relevant to an investment in, the referenced securities. The case studies have been selected to illustrate the investment process undertaken by the Manager in respect of a certain type of investment, but may not be representative of the Fund's past or future portfolio of investments as a whole and it should be understood that the case studies of themselves will not be sufficient to give a clear and balanced view of the investment process undertaken by the Manager or of the composition of the investment portfolio of the Fund now or in the future.
important information.
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