In mid-December 2018, 200 countries attended the UN Climate Summit in Katowice to discuss how global warming can be stopped. The topic is more critical than ever before. Shortly before the Summit, the Intergovernmental Panel on Climate Change (IPCC), the World Meteorological Organization (WMO), and the UN Environment Programme (UNEP) issued an urgent reminder that mankind has to take fast and decisive action in order to prevent catastrophic global warming.
An ever warmer world
Background: Despite all the efforts made, greenhouse gas emissions are still continuing to rise – and apparently at a rate even faster than before. This is one of the findings of the Global Carbon Project, an international alliance of climate change researchers comprising 76 experts from 15 countries. Based on figures from the first nine months of the year, experts fear a rise in emissions of between 1.8 and 3.7 percent in 2019.[1]. In 2015 and 2016, emissions had remained stable.
Challenges identified by climate researchers
The renewed increase is causing concern among experts. In order to limit the increase in temperature to 1.5 degrees Celsius, it would be necessary to halve emissions by 2030, explains Corinne Le Quéré, Director of the Tyndall Centre for Climate Change Research at the University of East Anglia in the UK, in an interview with Deutschlandfunk radio.[2]. According to her estimates, it is not enough to just promote the development of renewable energy sources. “Efforts to give up fossil fuels must be expanded across the entire economy,” demands Le Quéré. It is interesting to note that private investors can also make a meaningful contribution to combating climate change, for example by investing in an equity fund focused on sustainability.
What sustainable ESG funds take into consideration
Funds that focus on sustainable investing are often also referred to as “ESG funds” (ESG = environment, social, and governance). When deciding whether to invest in a certain company, ESG funds consider to what extent the company takes into account environmental and social factors, and whether its corporate governance meets the generally accepted standards. By taking into consideration ESG and sustainability criteria, investors are therefore also pursuing an additional – environmental – objective on top of their traditional goals (e.g. targeting returns).
Where ESG funds are invested – and where not
The newly launched DWS Invest SDG Global Equities fund represents yet another significant step further. In addition to the ESG criteria, this fund also takes into account the UN environment goals. In 2015, the UN defined 17 goals aimed at safeguarding sustainable development on economic, social, and environmental levels.
The UN Sustainable Development Goals
The SDGs have been adopted by all 193 members of the UN. In summary, the SDGs can be considered a comprehensive and prudent development of ESG factors – with the significant advantage that the definition includes both targets and indicators.
This is where the new DWS Invest SDG Global Equities fund starts out: The average SDG-relevant turnover generated by companies in the fund should be more than 50 percent. As a consequence, this means that every second euro invested in the fund can actively contribute toward the 17 UN SDGs.
Paul Buchwitz is the lead manager responsible for the new fund. He is a proven expert in sustainable investments: Buchwitz has been investing in equities in the area of sustainability for DWS since 2007. When making investments for the DWS Invest SDG Global Equities fund, Buchwitz not only considers ESG and SDG criteria. He also makes every effort to generate returns in line with the broader equity market.
