Northern Trust Asset Management (NTAM) has launched its World Natural Capital Paris-Aligned Index strategy, a sustainable index investment solution that aims to efficiently integrate climate and natural capital considerations.
The strategy combines alignment with the 1.5 degrees Celsius decarbonization pathway, nature-aware tilts and screens, and Northern Trust Custom ESG (environmental, social and governance) exclusions, acknowledging the intrinsic synergies in the twin crises of climate change and biodiversity loss.
The solution aims to closely match the risk and return characteristics of the MSCI World Natural Capital Paris-Aligned Equity Select Index, a customized index that screens companies linked to ecosystem loss and water pollution, and to those that are mis-aligned with UN Sustainable Development Goals 14 (Life Below Water) and 15 (Life on Land).
There is an uplift in exposure to companies with nature-related transition opportunities, the company says, including those with environmental impact solutions revenue and positive transition preparedness considering land use and biodiversity, resource use and emissions, effluents and waste.
“Investors are increasingly considering a wider spectrum of interconnected environmental considerations when looking to reflect the objectives of a transition to a climate-resilient economy,” says Julie Moret, global head of sustainable investing and stewardship at NTAM. “This strategy offers a compelling solution for them.”