KBI Global Investors, a Dublin-based active equity manager, has ramped up its investment in sustainable and natural resource companies in recent years with an eye toward producing strong returns and making a positive mark on the world, according to Matt Sheldon, senior portfolio manager within KBI's natural resources equity strategies division.
"At the end the day, the whole point is we think we can outperform the market over time because more money is going to be spent and when the world has more problems, they're calling our companies which have solutions," Sheldon said.
KBI, with $16.8 billion in assets under management, began investing in water and sustainable energy in the early 2000s, Sheldon said. By the time the firm was acquired by Amundi in 2016, its sustainable and natural resource team had about $880 million devoted to the space, he added.
Now, that number is $7.9 billion, spread over investments in water infrastructure, sustainable infrastructure, energy transition companies and firms aiming to reduce waste.
"These are multidecade themes, these are areas we can focus on as specialists and ultimately generate alpha," Sheldon said. "More money is going to be spent over time addressing the challenges of food, energy and water, and fast forward 20-something years, it's more severe than we could have imagined."
Sheldon said interest among investors in sustainable strategies has grown expeditiously over the years.
"People are looking to diversify their allocations and are looking for things that have positive risk-return characteristics," he added. "On the other hand, people are trying to align their investments with their values, and we do that in a very noncontroversial way. It's a way for people when they look at what they own, they want their money to make a difference."
KBI's investor base include public pensions, including the $3.1 billion Marin County Employees' Retirement Association, San Rafael; the $1.9 billion Tulare County Employees' Retirement Association, Visalia, Calif.; as well as family offices and retail investors.
Investors across the globe have united around zero emissions targets by 2050, Sheldon noted, which presents an opportunity for firms like KBI. "Now you have this perfect alignment of interests, technologies that are fully economic, mostly developed, and more money is being spent," he said.
Looking ahead, Sheldon said he expects investor interest in the sustainable space to increase because of recent laws passed in Europe and the United States, and rising temperatures coupled with high-profile natural disasters.