Climate solutions update

Climate solutions update

We have reviewed portfolio companies for alignment to Project Drawdown's 11 new climate solutions and included them on our Portfolio Explorer.

In mid-2022, Project Drawdown announced 11 new solutions to their collection related to ocean resources, food production, methane management, and materials manufacturing and use.

Founded in 2014, Project Drawdown® is a non-profit organisation that seeks to help the world reach ‘drawdown’ — the future point in time when levels of greenhouse gases in the atmosphere stop climbing and start to steadily decline. We use Project Drawdown - www.drawdown.org - to help us understand the role companies can play in climate solutions and we map investee companies to Project Drawdown’s collection of climate solutions, which if scaled up, can help to deliver the Paris Agreement’s 1.5oC temperature goal.

New solutions

We first published how investee companies align to the 82 Project Drawdown climate solutions in the third quarter of 2021 and have updated these on an ongoing quarterly basis. In mid-2022, Project Drawdown announced 11 new solutions to their collection related to ocean resources, food production, methane management, and materials manufacturing and use. There are now 93 solutions in the framework. We have grouped these solutions into eight drawdown areas. Project Drawdown have modelled the potential of these solutions and found that they can potentially deliver more than 1,600 gigatons of emissions abatement1.

Our focus is on whether the companies themselves are making a meaningful contribution to delivering the solutions. We have reviewed portfolio companies for alignment to these new solutions and included them on the Q4 2022 Portfolio Explorer update.

Below summarises our review.

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New solutions, descriptions and companies mapped as at Q4 2022.

Food system

Improved Aquaculture

Using renewable sources for on-site energy consumption can reduce greenhouse gases.

[No relevant companies]

Improved Cattle Feed

Adding nutrient-rich plants, additives and supplements to the diets of cattle can reduce methane emissions while also improving animal health and productivity.

Chr. Hansen

Good bacteria that improves animal welfare and gut health, and reduces antibiotic use.

Improved Fisheries

Better management of wild-capture fisheries can reduce overfishing and overcapitalisation of fishing fleets as well as sequestering carbon by reducing fuel use and rebuilding fish stock.

SPAR Group

Engaging with industry peers, international organisations, governments and small-scale fish farmers to encourage better fishing practices.

Improved Manure Management

Advancing technologies and practices for livestock manure management can reduce greenhouse gas emissions.

[No relevant companies]

Seafloor Protection

Establishing Marine Protected Areas and curbing bottom-trawling fishing helps protect the large amounts of carbon stored in seafloor sediment.

[No relevant companies]

Seaweed Farming

Produces biomass which can be used for biofuel, bioplastic, livestock feed and human consumption while also helping carbon sequestration.

[No relevant companies]

Energy

Methane Leak Management

Addressing leaks in the production and transportation of oil and natural gas can reduce greenhouse gases.

INFICON

Methane leak detector products.

Conservation & restoration

Macroalgae Protection and Restoration

Better management of wild-capture fisheries can reduce overfishing and overcapitalisation of fishing fleets as well as sequestering carbon by reducing fuel use and rebuilding fish stock.

[No relevant companies]

Circular economy & industry

Recycled Metals

Reducing the need to extract new resources by reusing existing metals while also saving energy and water.

A. O. Smith

Recyclable steel water heaters and boilers plus recycled steel used as source material.

Bosch India

Recycled steel and aluminium used in products.

Copart 

Vehicle salvage and reuse of metal car parts.

Costco

Scrap metal recycling programme.

Halma

Scrap aluminium sorting technology and aluminium casings which are lighter and recyclable.

Nexans

Metal cable recycling and recovery.

Rational

Reyclable steel components and customer take-back programme.

Tomra 

Metal sorting technology.

Recycled Plastics

Reducing demand for fossil-fuel based raw materials while also averting landfill use and reducing environmental pollution.

Clicks

South Africa Plastic Pact commitments plus essentials range which is packaged in recyclable plastic packaging.

Costco

Plastic packaging recycling and consumer labelling initiatives.

Dabur

Plastic waste neutral meaning they take back and recycle the equivalent weight of plastic they produce.

Godrej Consumer Products

India Plastic Pact commitments and are plastic waste neutral.

Natura

Global Commitment on the New Plastics Economy. 60% of plastic packaging recyclable (FY2021).

Pigeon 

Nursing bottle recycling programme.

Tata Consumer Products

India Plastic Pact commitments and are plastic waste neutral.

Unilever and Unilever Indonesia 

Plastic packaging recycling.

Vitasoy 

PET bottle reverse vending machine and recycled plastic in containers.

Walmart de México (Walmex)

Recycled plastic waste and reuse of plastic for store fixtures and fittings.

Reduced Plastics

Achieving significant reductions in greenhouse gas emissions and plastic waste.

ALK-Abelló

Allergy immunotherapy drops packaging 60 tonnes less plastic per annum.

A. O. Smith 

Water filtration products to bottle drinking water. 

Beiersdorf

Refillable porcelain bottles in NIVEA range.

Clicks

South Africa Plastic Pact commitments plus essentials range which is plastic-free packaged.

Costco

c.23 million pounds of reduced plastic use in FY21 and FY22.

Godrej Consumer Products

Improving product packaging and developing new products (mosquito coil bags and hand & body wash) which use less plastic.

Indian Hotels Company

First zero single-use plastic hotel in India.

Marico and Marico Bangladesh

India Plastics Pact commitments plus product and packaging initiatives e.g. shrinking films and recycled PET in hair bottles. 

Natura

Reduction in use of virgin plastics, bottle refill stations and plastic free body and hair shampoo bars.

Tata Consumer Products

Improving products such as biodegradable tea bags and container reuse stations.

Solution renamed

Project Drawdown also renamed their Health and Education solution to Family Planning and Education. This solution advocates universal and global access to quality education for all children, and voluntary family planning for all girls, women, and couples.

Clicks, Dabur, Godrej Consumer Products and Tata Consultancy Services remain aligned to his solution. We have also added XP Inc. as a large part of their service is to provide financial education to minority groups. We removed Kotak Mahindra Bank following our review as their contribution was more related to microfinance.

Contribution definitions

Following client feedback we have also simplified how we define company contributions to Project Drawdown climate solutions and have removed Indirect (companies that are involved in and around the solution) as a measure. Contributions are now defined as either Direct (directly attributable to products, services or practices provided by that company) or Enabling/Supporting (supported or made possible by products or technologies provided by that company). While there will always be some grey areas, especially for companies that disclose less information, we will be transparent in our rationale and welcome any debate or discussion with clients.

Whilst there will always be grey areas, especially when it comes to companies that disclose less information, we will continue to be as transparent as possible when it comes to our rationales, all of which are updated quarterly on Portfolio Explorer.

Footnotes

  1. Source: Stewart Investors and Project Drawdown solutions data. Gigatons CO2 Equivalent Reduced / Sequestered (2020-2050).


For illustrative purposes only. Reference to the names of example company names mentioned in this communication is merely for explaining the investment strategy and should not be construed as investment advice or investment recommendation of those companies. Companies mentioned herein may or may not form part of the holdings of Stewart Investors. Holdings are subject to change.

Certain statements, estimates, and projections in this document may be forward-looking statements. These forward-looking statements are based upon Stewart Investors’ current assumptions and beliefs, in light of currently available information, but involve known and unknown risks and uncertainties. Actual actions or results may differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements. There is no certainty that current conditions will last, and Stewart Investors undertakes no obligation to correct, revise or update information herein, whether as a result of new information, future events or otherwise.

Stewart Investors supports the Sustainable Development Goals (SDGs). The full list of SDGs can be found on the United Nations website.

Source for Climate Solutions and impact figures: © 2014–2022 Project Drawdown (drawdown.org). Source for Human Development Pillars: Stewart Investors investment team.

Source for climate solutions and human development analysis and mapping: Stewart Investors investment team. Contributions are defined by the team as demonstrable contributions to any solution, either direct (directly attributable to products, services or practices provided by that company) or enabling (supported or made possible by products or technologies provided by that company). 

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