ESG Portfolio Spotlight:
Third Quarter 2019

ESG Portfolio Spotlight: <br/>Third Quarter 2019

Westmount’s Environmental, Social and Governance (ESG) Portfolio allocates clients across a diverse selection of investment managers that directly support innovative companies driving positive social change. Westmount’s ESG managers are aligned with the United Nations Sustainable Development Goals, a globally recognized framework adopted by the U.N. General Assembly to collaboratively tackle humanity’s most pressing issues.

Portfolio Spotlight: Essex Funds

The managers of the Essex Environmental Opportunities Fund (GEOSX) view environmental issues as a landscape of opportunity for nascent companies pioneering new technology and solutions. The team focuses on companies that enable greater natural resource and energy efficiency, emphasizing the long-term potential of innovative clean technologies.

Here’s a look at some of the initiatives Essex has recently undertaken:

Waste as a Resource for Renewable Energy

Global waste levels are expected to reach 2.6 billion tons by 2030, up 29% from 2016. Furthermore, these increased waste levels are contributing to overall greenhouse gas emissions, as most waste is either incinerated (releasing carbon into the air) or left to decompose in a landfill or other dumping site, as shown in the chart below.1

 

Most global waste today is either incinerated or sent to decompose in a landfill. By collaborating with other companies and across industries, Ørsted is working to increase the amount of waste that is recycled or repurposed.


Global waste processing chart

 

While waste reduction and elimination continue to dominate the conversation about how to address this growing challenge, Ørsted A/S, one of Essex’s largest holdings, sees an opportunity to leverage better waste management practices in order to extract valuable materials and energy from waste that would otherwise be discarded.

In 2018, Ørsted partnered with two fellow Danish companies to form the Kalundborg industrial biogas plant. At Kalundborg, industrial waste generated from insulin and enzyme production is converted into natural gas—enough to cover the gas consumption needs of 5,000 households. The remaining nutrients from the conversion process are regenerated into fertilizer for farmland. The Kalundborg plant can process up to 300,000 tons of waste per year, and has become a major contributor to a circular economy that creates a positive feedback loop for the environment.

Capturing Solar Energy

Solar panels

SunRun, a consumer solar and energy storage company, has been leading the charge for accessible solar services since 2007.

SunRun’s “Brightbox” system employs an innovative, in-home battery installation that works in tandem with their solar panels. On a large scale, this enables not only use of the sun’s energy during peak electricity consumption, but also smarter storage during quiet hours. This shifts reliance away from the power grid and creates a more decentralized system that reduces consumer electricity costs, provides a safer and more efficient means of power distribution, and results in fewer blackouts. SunRun’s installations have saved a cumulative total of 3.7 million metric tons of carbon emissions, or the equivalent of more than 9 billion passenger vehicle miles.2

In 2018, the company committed to supporting the Solar Equity Initiative, a national effort spearheaded by the NAACP to bring more solar power to low-income neighborhoods and communities of color.3 Last year, SunRun also launched an initiative to bring solar to residents of multi-family affordable housing in California.

Financing Green Projects

Wind farm

Hannon Armstrong is an environmental finance firm that provides capital to projects directly contributing to environmental sustainability and climate change abatement.

In 2018 the company deployed $1.2 billion of capital: for every $1,000 of capital invested, carbon emissions were reduced by 0.42 metric tons. In aggregate, the impact of Hannon Armstrong’s 2018 efforts offset the equivalent of the carbon emissions produced by all households in Beverly Hills over the same period.4 This impact is achieved via a concentrated portfolio of renewable energy projects, including 7,500 acres of solar farms and over 800 wind turbines.

Other projects in the strategy include refitting commercial, government, and historic buildings with energy-efficient technology. For example, in 2013 the firm partnered with contractors in the city of Louisville, Kentucky to fund $27 million in sustainable improvements across several government buildings. State-of-the-art cooling and electrical upgrades, among others, were estimated to cut the city’s carbon emissions by 12,000 tons each year, roughly the same amount that would be generated by 26,000 homes.5

Have questions about our ESG offering or investment platform? Call us at
310-556-2502
or email info@westmount.com to speak with an advisor today
Read our Q2 spotlight on Parnassus Funds here.

 

1Source: 2018 Sustainability Report, Orsted
2Source: 2018 Impact Report, SunRun
3Ibid.
4Source: U.S. EPA (2017) Light-Duty Automotive Technology and Fuel Economy Trends: 1975 Through 2017
5Source: Center for Sustainable Systems, University of Michigan. 2018. “Carbon Footprint Factsheet.” Pub. No. CSS09-05