The importance of “building back better” and investing on a more sustainable footing in a post COVID-19 world. Save the world from Climate change and catastrophe
In 2016, on a scorching hot summer evening in London, Alexander Kalis and Jean-Marc Champagne, two long-time friends, caught up at the Mayfair offices of Milltrust International to share their deep concerns as to how the world was sleepwalking into a climate disaster, and how the asset management industry seemed to be asleep at the wheel.
Of course, Champagne, an experienced finance professional who had recalibrated his career from established global banks to join WWF in Hong Kong as Head of Environmental Finance Asia Pacific, was fully versed on the subject and the objective of his business trip to the United Kingdom was none other than to raise awareness from institutions to take environmental metrics including climate change into account when valuing their investments. Discussions with the big asset managers that dominated the investment landscape had gone well, with polite attendance at the numerous meetings he had set up, but few of them seemed eager to genuinely embrace his clarion call for change.
He shared his vision for a fund that would help channel private capital into innovative climate solutions, and this was the ‘Eureka’ moment for Kalis, Managing Partner at Milltrust International, a boutique asset manager dedicated to impact investment with a strap line of “sustainable prosperity”. Milltrust had its roots in both the UK and Asia, with CEO Simon Hopkins living and working for the best part of a decade in Singapore. The group had launched a world-beating emerging markets programme with a strong focus on ESG and had also developed into an investment specialist providing a range of award-winning, innovative and sustainable investment solutions to address some of the greatest themes of our generation.
“With the greening of the economies, there is tremendous opportunity for investors to generate strong returns led by the structural growth dynamics in the transitioning to a low carbon economy while also making a positive impact” Kalis thought. Investors would not have to sacrifice returns for the sake of doing good, and this was the key to rolling out a successful offering that would appeal to investors.
Fast forward to 2020, Milltrust’s Climate Impact Asia Fund is now a reality after 3 years of discussions with WWF-Hong Kong and the fine-tuning of the investment strategy.
The Climate Impact Asia Fund is managed in an exclusive collaboration with WWF-Hong Kong, who serves as the environmental consultant to the fund. As a permanent and active investment advisory committee member, WWF-Hong Kong has a key role in ensuring that the climate mandate of the fund is respected, while also providing environmental expertise and key insight on climate change policies. Kalis now chairs the fund’s investment advisory committee and leverages his 20+ year investment experience as well as his experience as an independent expert at Climate-KIC, Europe’s largest public-private partnership, supported by EIT (European Institute of Innovation and Technology) to deliver a fund that focuses not only on companies which address climate change mitigation but also donates up to 40 percent of its fee income to WWF’s biodiversity and species extinction-focused conservation programmes that deliver genuine and tangible ‘on-the-ground’ impact by one of the world’s leading NGOs.
“With the Asia Pacific region accounting for 49.4% of global CO2 emissions (vs U.S. 18.2%, Europe 12.5%, Middle East 6.3%, CIS 6.2%, South/Central America 3.8% and Africa 3.6% )”, Kalis explains, “this is the part of the world that needs the biggest focus if we are to solve the climate crisis. But Asia is also taking a lead in the fight against climate change. For example, China has spent US$100 billion into clean energy alone in 2018 and is already well ahead of its Paris agreement target of hitting peak carbon emissions by 2030. In little more than a decade, China has made itself a world leader in electric vehicles, renewable energy, and energy storage. “This is why we wanted The Climate Impact Asia Fund to focus on Asian-listed companies making positive impact solutions against climate change”, adds Champagne. These are companies in sectors selected by WWF-Hong Kong which include :
The fund is currently invested in 36 companies whose collective low carbon environmental operations are forecast to contribute a positive impact of :
Today, the fund has generated strong performance and has benefitted from:
Kalis commented that: “since mid-March, the global pandemic has been potentially transformational for the low carbon economy. On August 5th the NDRC announced installation targets of 11.4GW of wind capacity and 33.1 GW of solar capacity for 2020 which will require an estimated US$32bn of investment. This clarity has provided a welcome boost for China’s renewable energy operators and further highlights the cheap valuations of those that are listed on the Hong Kong Stock Exchange. Combined with the ongoing privatization trend and the recent news of the strategic co-operation agreement between leading direct drive wind turbine manufacturer Goldwind Technology and BYD to develop large scale battery storage systems for the adaption and scaling up of renewable energy supply, the outlook for the performance of the Fund’s Chinese low carbon cleantech holdings remains encouraging.”
 BP Statistical Review of World Energy, 2018
 Bloomberg, EISAL Research, Company Reports, WWF, UN, LNG Industry, Impact Alpha, Asia Water, REN21, Waste Management World, FT, China Power 2020
 EISAL Research, EPA, IRENA, Company Reports
About the Author
Mr Alexander Kalis is the Managing Partner of Milltrust International LLP in the United Kingdom, which he co-founded in December 2010.
He is Head of Investments and Portfolio Manager of the British Innovation Fund (VC/Early-Stage university venturing focused on AgTech, BioTech, Life Sciences, MedTech, NanoTech, DeepTech, and FoodTech), as well as Portfolio Manager of Milltrust’s Buy & Lease Agriculture Funds (Real Assets/Farmland), and Co-Portfolio Manager of the Milltrust Global Emerging Markets Fund (multi-manager).
As a passionate leader in the fight against climate change and in channelling private sector capital into profitable environmental focused projects, solutions-driven startup businesses, and impact funds, Mr Kalis spearheaded Milltrust’s dedicated Sustainable Impact Investments business. He serves as Investment Advisor and Chairs the Investment Advisory Committee of Milltrust’s Climate Impact Asia Fund (listed equities), a pioneering environmental impact fund he launched in exclusive partnership with WWF-Hong Kong.