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Our investment professionals share and challenge each other’s views, creating a diverse marketplace of ideas for the Wellington Blog.

Decarbonization

A climate-driven capital cycle is underway, and we believe companies must invest in low-carbon solutions to protect and grow the value of their assets and strengthen competitive positions. In our view, companies that prioritize environmental stewardship and establish clear climate strategies can be first movers and market leaders that profit from the low-carbon transition and deliver value for investors.

Identifying — and encouraging — climate leadership

We want all portfolio companies to achieve net-zero greenhouse gas (GHG) emissions by 2050 and set science-based targets to accomplish this. We look for companies that view climate planning as a strategic priority. We seek businesses adapting to changing regulations and positioning themselves to capitalize on evolving governmental incentives and consumer preferences. During our engagements, we ask boards and management teams to embrace low-carbon practices and align business plans with the Paris Agreement to cap global temperature rise to 1.5°C. We seek leadership on supplier practices and sustainable product innovation as a way to reduce indirect emissions. Our proxy voting policies are aimed at…

SUSTAINABILITY
Mark Mandel
Mark Mandel
CFA
Equity Portfolio Manager
Boston
Yolanda Courtines
Yolanda Courtines
CFA
Equity Portfolio Manager
London

Based on the most recent available data, March 2021 was the first month ever in which Chinese imports exceeded US imports (Figure 1). China was already the world’s largest trader overall (imports plus exports), but this latest development now also makes it the largest source of both global demand (imports) and global supply (exports). This is a notable milestone and perhaps another step toward China eventually surpassing the US as the world’s biggest economy (which, as I observed in my February 2021 blog post, could occur as early as 2028).

The strong import number, together with a weaker-than-expected export number and the potential for further export weakness as the world normalizes, could put some near-term pressure on…

Over the next 20 years, trillions of dollars are likely to be spent modernizing the global electric grid to accommodate increased “electrification” and the growing dominance of renewable energy sources.

We believe regulated electric utilities are an underrecognized way to invest in the energy transition and can be attractive investments due to their high growth potential and stable return profile. With relative valuations recently at 15-year lows, we think electric utility stocks look particularly attractive versus the broader equity market in today’s environment.

Capitalizing on the energy transition

As the world shifts toward a low-carbon economy to stem the effects of climate change, decarbonizing the global energy sector will be critical. The clean energy, clean transport, and electricity sectors may experience unprecedented…

SUSTAINABILITY
Tom Levering
Tom Levering
Global Industry Analyst
Boston
Timothy Casaletto
Timothy Casaletto
CFA
Global Industry Analyst
Boston
ken Baumgartner
Ken Baumgartner
CFA
Investment Director
Boston
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