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Envestnet Launches Impact Global Climate Solutions QP
Illinois Ag Connection - 10/16/2020

Envestnet, Inc., Chicago, announced that its Quantitative Research Group (QRG) team has launched a new Quantitative Portfolio (QP), the Impact Global Climate Solutions QP. This strategy offers a passively managed, global equity portfolio enabling investors to allocate assets toward companies developing solutions for mitigating pollution and climate change.

The Impact Global Climate Solutions QP consists of approximately 200 domestic large-cap and international developed market companies from its benchmark*, and is designed to mimic the index's overall characteristics. Each company in the QP is evaluated by the QRG team using environmental ratings, revenue information, and carbon risk data from Sustainalytics, a leading independent provider of global environmental, social, and governance (ESG) research and ratings. Companies deriving revenue from the fossil fuel industry, or companies that have been involved in environmental controversies, are removed from the portfolio.

In addition, QRG utilizes five environmental tilts to increase exposure to companies dedicated to solving climate-related issues:

- Renewable Energy: The portfolio currently has a 200% higher allocation to renewable energy production and transmission companies than the benchmark.

- Energy Efficiency: The portfolio currently has a 200% higher allocation to companies producing or enhancing energy efficient technologies and practices, compared to the benchmark.

- Green Transportation: The portfolio currently has a 200% higher allocation to companies dedicated to providing green transportation options, compared to the benchmark.

- Green Buildings: The portfolio currently has a 200% higher allocation to companies involved in the construction of green buildings than the benchmark.

- Sustainable Agriculture: The portfolio currently has a 200% higher allocation to companies providing and developing sustainable agriculture products and technologies, compared to the benchmark.

"There are many sophisticated climate-aware strategies, but they are actively managed, and the climate indices underpinning them are often static, exclusion-focused, and have high potential for tracking error compared to the parent index," said Brandon Thomas, Co-Founder and Chief Investment Officer of Envestnet. "Our Impact Global Climate Solutions QP fills a major gap in the marketplace for a passively managed, cost-effective strategy which is focused on supporting companies engaged in solving climate-related issues."

The QRG team's unique reporting capabilities break down the Impact Global Climate Solutions QP's holdings into statistics which show investors how the portfolio, and their investments, are making a difference. The QP reports approximate how much lower the portfolio's carbon footprint is compared to the benchmark, and demonstrate the significance of the carbon reduction, such as how many fewer gallons of gasoline and pounds of coal have been burned as a result. Reports also illustrate how many gigawatt hours of renewable energy the portfolio's holdings have produced, and how many homes can be powered with that energy per year.


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