Climate change is the most profound driver of hard change the world has faced in over a century. Consequently, investing in climate change solutions is a megatrend no asset manager can ignore. Whilst climate change provides significant investment opportunities, it also comes with great risks that require proactive and thoughtful management.

At AltoCumulus we take a long-term investment perspective and fully integrate sustainability analysis within a rigorous framework of financial analysis. Our sustainability work has broadly materialized into three strategies that we see as key to our long-term alpha generation and portfolio risk mitigation:

1. To integrate sustainability analysis into every investment decision, ensuring every investment meets our high sustainability standards.
2. To invest in sustainability trends that drive transformative change required for a net-zero, prosperous, equitable, healthy and safe society.
3. To measure and report on our portfolio’s sustainability KPIs. Measurement is the first step to improvement and transparency enforces accountability.

Investing in sustainability trends requires an empirical theme discovery and constant examination, thereby eliciting the causal factors of growth resilience, upside scenarios, factors influencing downside protection, and associated growth calibrated pricing.

Over the last decade, we have invested in wind and solar development, microinverters for solar panels, battery storage, residential energy systems, EV charging infrastructure, EV charging operators, recycling of green metals, biodegradable plastic manufacturing, tech-driven sustainable agriculture, sustainable foods and much more.

Looking ahead, we see the proliferation of climate-led investing amassing investments into the hard-to-abate industries and the next frontier of energy solutions. These include floating offshore wind, green hydrogen, grid flexibility, microgrids, improved battery technologies, sustainable fuels, energy efficient heat pumps, alternative cements, green steel, engineered timber and much more.

Circularity is key to abating emissions and lowering demand for virgin materials. The world economy consumes 100 billion tonnes of raw materials a year. However, just 8% is currently recycled. Materials production has an enormous carbon footprint of more than 40% of global emissions. Recirculating 75% of steel, 50% of plastics and 50% of aluminium would meet over 60% of Europe’s annual material need and cut emissions by up to 60%. Investing in circular design, circular infrastructure, advanced materials and circular business models is paramount to solving the climate crisis.