risks.

    The following risks may be materially relevant but may not always be adequately captured by the summary risk indicator and may cause additional loss: Credit risk, Liquidity risk and Concentration risk. Sustainability risks may lead to a significant deterioration in the financial profile, profitability or reputation of an underlying investment and may therefore have a significant impact on its market price or liquidity. The environmental, social, and governance (“ESG”) considerations discussed herein may affect an investment team’s decision to invest in certain companies or industries from time to time. Results may differ from portfolios that do not apply similar ESG considerations to their investment process.

    glossary.

    Global Carbon Opportunity

    The alpha potential of a growing market, key to the environmental transition.


    Access to actively-managed, long-biased exposure to potentially attractive risk/reward carbon opportunities globally.

    17xincrease

    in carbon prices required for net zero by 20501

    USD900billlion

    annual traded volume in 20212

    0.38

    correlation with equities and 0.03 with bonds3

    1. Source: LOIM Analysis. For illustrative purposes only. Average across the NGFS orderly climate transition scenario estimates for 2030 and 2050. Includes both a net-zero, 1.5° C economy at about 2050 as well as less stringent sub-2°C scenarios.
    2. Source: Carbon markets: invest in greenhouse gas emissions. Published by Credit Suisse in April 2022.
    3. Correlations measured from July 2014 to June 2022. Source: LOIM analysis. Correlations of equities and bonds with carbon measured, respectively, by the MSCI ACWI Net Total Return USD Index and Bloomberg Global-Aggregate Total Return Index-Value Hedged USD with the IHS Markit Global Carbon Index, starting July 2014.

    introducing carbon markets
    introducing carbon markets·why carbon now?·our strategy·why us?·our investment process·team·get in touch

    introducing carbon markets.

    Carbon markets are now at sufficient scale to become an investment opportunity, with many suggesting carbon is on its way to becoming a mainstream asset class that could even rival the size of major commodity markets, including oil.

    There are two types of carbon market:

    hammer.png

    Compliance markets

    which are Government-regulated and focus on decarbonising high-emitting sectors, in which allowances (permits) are the main instruments

    world.png

    Voluntary markets

    enabling corporates to achieve climate commitments, primarily through carbon credits linked to reduction or sequestration projects

    why carbon now?

    We believe carbon is underpriced versus global climate goals and offers unique portfolio construction benefits to investors with its return potential, low correlation with other asset classes and efficient hedge against rising carbon prices.

    Price discovery in this market remains somewhat inefficient too, as there are many corporate participants yet relatively few professional investors in this asset class currently.

    With carbon markets globalising, ETSs are also being established in many new markets outside the EU.

    our strategy.

    Carbon - alpha opportunities-01.svg

    Alpha generation

    Through a wide range of instruments in established and emerging carbon markets

    Icon_1.png

    Net-zero alignment

    Promote a net-zero, nature-positive economy while hedging climate-transition risks

    Icon_2.png

    Carbon expertise

    More than 30 years’ combined experience in carbon investment and strategy4

    4, Source: LOIM as at November 2022.

    Our strategy offers an actively managed, long-biased exposure to potentially attractive risk/reward carbon opportunities globally. We look to generate attractive risk-adjusted returns with low correlations to traditional and alternative asset classes. Key benefits include:

    • Hard-to-access new and emerging carbon markets that are unavailable to traditional investors - leading to quality alpha-generation potential using a wide range of instruments to take advantage of market inefficiencies in both compliance and voluntary markets.
    • Diverse team knowledge across conceptual and market expertise, policy and business insight as well as portfolio management
    • Actively-managed tail risk to protect against potential price shocks
    • Promotion of a net-zero and nature-positive transition by contributing to the expansion and development of global carbon markets

    why us?

    With global climate action driving the development and expansion of carbon markets worldwide, we believe an active carbon strategy can help investors capture attractive return opportunities while hedging transition risks in their portfolios. In addition to the team’s combined market, policy and investment acumen, we believe it is our broad universe and active approach that sets us apart from many of our peers.

    Source: LOIM analysis. For illustrative purposes only. No representation is made that the Manager’s investment process, investment objectives, goals or risk management techniques will or are likely to be achieved or successful or that the Strategy or any underlying investment will make any profit or will not sustain losses. Target performance/risk represents a portfolio construction goal. It does not represent past performance/risk and may not be representative of actual future performance/risk.

    our investment process.

    Our disciplined investment process, combining bottom-up and top-down analysis aims to maximise risk/return for each opportunity, drawing on substantial carbon-market experience within the team and sustainability expertise across the firm.

    1.
    Universe
    selection

    2.
    Investment
    idea generation

    3.
    Portfolio
    construction

    4.
    Portfolio
    management

     

    team.

    investment team.

    Callum-Lee-Author.png

    Callum Lee
    Portfolio Manager

     

    Ruben-Lubowski_author-v2.png

    Ruben Lubowski
    Chief Carbon and Environmental Markets Strategist

     

    Lorenzo-Bernasconi-Author.png

    Lorenzo Bernasconi
    Head of Climate and Environmental Solutions

     

    sustainability.

    		    
    LOcom_AuthorsAM-Becerra.png

    Adriana Becerra-Cid
    Sustainability Manager

    		  

     

    The composition of the investment team may change.

    insights.

    The ascent of China’s national Emissions Trading Scheme
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    The ascent of China’s national Emissions Trading Scheme

    China is already the world’s largest carbon market. In our view, it will also become the world’s most valuable one. We explain the forces driving its growth.

    ‘A race to the top’: CBAM’s impact on global carbon pricing
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    ‘A race to the top’: CBAM’s impact on global carbon pricing

    Could Europe’s new carbon tax on imports reverse years of cross-border climate cynicism and advance global efforts to better price emissions? 

    A new dawn for voluntary carbon markets?
    alternatives Wholesale
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    A new dawn for voluntary carbon markets?

    New guidelines have the potential to boost confidence and participation in the voluntary carbon market by identifying high-quality credits. 

    Emissions trading: the market overlooks UK cap reforms
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    Emissions trading: the market overlooks UK cap reforms

    The UK has extended and could expand its Emissions Trading Scheme as part of its strengthened commitment to carbon markets, deepening the opportunity set for investors.

    Carbon credits: reinforcing quality for impact and returns
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    Carbon credits: reinforcing quality for impact and returns

    Important actions are being taken to enhance the ability of carbon credits to channel much-needed finance to protect and restore nature.

    Carbon markets advance despite mixed COP27 results
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    Carbon markets advance despite mixed COP27 results

    COP27 was a missed opportunity to finalise rules governing how nations can cut emissions using carbon markets – but will that hinder the markets' growth?  

    discover more

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