Athilon Structured Investment Advisors

  • Investment
  • 20.10.2014 01:00 am

Mellon Capital, the San Francisco-based investment boutique of BNY Mellon, has launched its Carbon Efficiency Strategy with $100 million in funding from The McKnight Foundation.  The strategy is designed to provide investors with lower carbon emissions exposure than the broad U.S. equity benchmark.

Mellon Capital developed the Carbon Efficiency Strategy in collaboration with Mercer, a global consulting leader in talent, health, retirement and investments. Imprint Capital, a registered investment advisor that works with foundations, families, and financial institutions, also contributed. The strategy invests in the broad U.S. stock market, underweighting inefficient carbon emitters, such as utilities over-exposed to coal generation, while overweighting companies with lower carbon intensities. Additionally, the strategy bars investments in coal mining and production companies.

Carbon intensity is defined as greenhouse gas emissions per unit of sales.

McKnight is a Minneapolis, MN-based family foundation working across multiple programs and geographies to improve the quality of life for present and future generations. The creation of the Mellon Capital Carbon Efficiency Strategy followed McKnight's June 2014 announcement of an impact investing commitment of $200 million to support transitions to a low-carbon economy and sustainable regional development in Minneapolis-St. Paul. McKnight's $100 million investment in the Carbon Efficiency Strategy is in addition to that previously announced commitment.

McKnight's President Kate Wolford said, "Innovative new approaches like the Carbon Efficiency Strategy give foundations leverage in choosing how to invest, and how we engage with businesses as shareholders. This supports McKnight's commitment to accelerating the transition to a low-carbon economy."

"The goal of our Carbon Efficiency Strategy is to provide broad U.S. equity exposure, while minimizing investment in companies with inefficient carbon emissions and emphasizing companies that are committed to more efficient operations," said Gabby Parcella, chief executive officer of Mellon Capital. "We are seeing growing numbers of foundations, universities and other institutional investors across the globe interested in impact investing where they can address environmental challenges through their investment portfolios."

"We overweight environmentally efficient companies because we believe they may realize a competitive advantage," Parcella said.

Mellon Capital, a signatory of the United Nations Principles for Responsible Investment, incorporates an engagement approach into the strategy through investor initiatives and shareholder resolutions. Mellon Capital is also a signatory to the CDP Climate Change, Water and Forestry programs, which works with market forces to motivate companies to disclose and reduce their impacts on the environmental and natural resources and is a respondent through BNY Mellon's program response, which earned a prefect disclosure and performance score for both 2013 and 2014.

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