BNP Paribas Asset Management (BNPP AM) has launched an equity long/short alternative UCITS strategy with focus on environmental, social and governance (ESG) principles.
Dubbed Environmental Absolute Return Thematic (EARTH), the new vehicle is targeted at companies that are facing or addressing significant environmental challenges.
The strategy’s investment universe includes global developed and emerging market companies across the energy, materials, agriculture and industrials sectors, with capital over $1bn.
These companies will be mapped to one or more of eight environment-related United Nations Sustainable Development Goals.
The fund will seek to capture both long and short opportunities.
It will take long positions in the most promising and innovative firms offering solutions to environmental challenges.
This will be combined with short positions in firms with “unsustainable or technologically inferior business models vulnerable to transition risk”, noted BNPP AM.
The short positions are said to hedge the long exposures and act as an alpha source.
Short exposures will also have a positive impact by increasing the cost of capital for companies failing to address environmental challenges, it noted.
EARTH is jointly managed by BNP Paribas Energy Transition fund managers Edward Lees and UlrikFugmann, supported by a dedicated quantitative analyst.
EARTHjoint managerUlrikFugmann said: “EARTH builds on our long-standing experience as an investment team and BNPP AM’s well-established capabilities.
“EARTH offers our investors access to the sustainable investment theme within an innovative long/short framework, enabling them to benefit from positive change in both high and low carbon intensive sectors, with the aim of delivering long-term absolute returns while reducing risk during periods of market drawdown.”
Last year, the company ramped up its efforts in the ESG space by making its flagship fund range entirely sustainable.