NEXTENERGY FOUNDATION ENDOWMENT FUND

NextEnergy Foundation (“NEF”) launched an endowment fund in March 2023. The endowment strategy operates in five-year cycles and the income generated will supplement the Foundation’s grant-making activities. The Trustees of the NextEnergy Foundation have appointed an investment manager, EQ Investors, to manage the fund.

The fund’s investments fully align with NEF’s mission – to participate proactively in the global effort to reduce carbon emissions, provide clean power sources in regions where they are not yet available, and contribute to poverty alleviation – and 100% adhere to ‘do-no-harm’ principles. Please refer to the Investment Policy Statement for more details about the investment strategy.

Our Positive Impacts

Investments

EQ Investors (“EQ”) invests in companies and projects whose core products and services provide solutions to address global sustainability challenges. EQ uses the UN Sustainable Development Goals to select these solutions, and to avoid investments that prevent progress on the goals. For example, this includes investment themes:

  1. Health and well-being
  2. Social inclusion
  3. Natural capital
  4. Sustainable communities
  5. Climate

Positive impacts associated with the investments held in NEF’s portfolio as at 31 December 2023 include:

 

Disclaimer: All data and analysis provided by EQ Investors. Investing (e.g. buying shares in a company) does not create these outputs and outcomes: they are generated by the activities of our underlying portfolio holdings. An investment can be associated with these measures based on company disclosures and share of ownership. The impact made will differ depending on the amount invested and portfolio invested in. Data: All data has been collected from underlying investee company reporting, covering the reporting period 2022-23. Portfolio weightings are shown as of 31 December 2023. For an in-depth explanation of the impact measurement methodology see: eqinvestors.co.uk/positive-impact-methodology. Household equivalents calculated using average UK household consumptions and emissions.

In addition, 90.2% of NEF’s portfolio contributes solutions aligned to the SDGs. The fund’s investments fully align with NEF’s mission and adhere 100% to ‘do-no-harm’ principles.

Disclaimer: All data and analysis provided by EQ Investors. This data draws on EQ Investors’ own proprietary database based of companies and projects mapped against the EQ UN Sustainable Development Goal’s methodology. Companies and their bonds, as well as infrastructure assets, are assessed for their core revenue alignment to positive and negative criteria. Portfolio weightings and underlying holdings are shown as of 31 December 2023. An UN Sustainable Goal with no figure indicate that the portfolio has 0% exposure; this is because either the Sustainable Development Goal presents very few investable opportunities, or that companies within the portfolio may give exposure to multiple goals and the more relevant goals has been selected. Percentages may not add up to 100% as they are rounded to the nearest decimal. *The Climate Action goal overlaps with several more specific goals, so portfolio exposure to climate solutions has been mapped to them instead.

Investment Case Study: The Nature Conservancy

The Nature Conservancy is a global environmental organisation dedicated to conserving land and water resources, protecting biodiversity, and promoting sustainable practices to address pressing conservation challenges.

The organisation issued a green bond with the proceeds going towards protecting nature. Last year, The Nature Conservancy allocated $145 million towards 18 projects involving protecting living species, climate change adaptation and sustainable water and wastewater management across Africa, Asia-Pacific Europe, Latin and North America.

Overall, the green bond proceeds have contributed to the protection of 118,000 hectares of land and 500 km of rivers. Several of the projects are expected to extract carbon from the atmosphere over the next few years, while others are expected to help vulnerable communities.

This investment is advancing UN Sustainable Development Goal (SDG) 15: Life on Land.

Stewardship and Engagement

EQ also actively engages for change towards a more sustainable world. EQ tracks the impact that its investment strategy makes through a multi-layered stewardship framework which comprises the following:

  1. Assessment and Monitoring of external fund managers’ own engagement and voting policies, processes, and records.
  2. Engagement with external fund managers on identified weaknesses, and strategic engagement themes, with an aim to affect ESG/sustainability and stewardship ambition.
  3. Collective, collaborative engagement on underlying holdings to elevate concerns on strategic engagement themes.
  4. Annual General Meeting (AGM) attendance and board questioning on sustainability strategy of selected underlying holdings.

For more details about EQ’s approach to engagement, please refer to its Stewardship Code.

Engagement Case Study: Engagement on Climate

EQ avoids investing in the largest carbon polluters, but it still uses engagement to push for decarbonisation across key industries. The chemical industry is a case in point: it accounts for roughly 5% global greenhouse gas emissions and has historically received less scrutiny over its use of fossil fuels compared to other sectors. Most of the industry is not aligned with a 1.5C° transition pathway.

This year, EQ joined ShareAction’s Investor Coalition to tackle chemicals decarbonisation. The focus of the engagement has been encouraging companies to reduce the usage of fossil fuels in the chemical production process and setting ambitious targets on renewable energy consumption. For example, EQ’s Head of Sustainability, Louisiana Salge, attended the AGM of the UK-based chemical company Croda to ask the Board on whether they would commit to the RE100+ initiative, a global corporate renewable energy initiative bringing together hundreds of large and ambitious businesses committed to 100% renewable electricity. As a result EQ is currently in engagement conversations with Croda.