The US-based firm Pax World Management has announced that it has fully divested one of its funds from fossil fuel companies, meaning it now has two fossil fuel-free funds on offer.
The firm announced on Thursday that the Pax World Growth Fund (PXWGX) will now pursue a fossil fuel-free investment strategy, replacing such investments with holdings in high-impact companies developing solutions to sustainability challenges.
Examples include hybrid engine developers Valeo and Gilead Sciences, a biotechnology company working on treatments for HIV/AIDS, hepatitis and cancer.
Portfolio manager Tony Trzcinka explains that the move is not motivated purely by ethics, but also for financial reasons.
“Over the past few years, we have increasingly tilted this fund toward solutions-oriented companies as opposed to simply investing in companies that meet our environmental, social and corporate governance (ESG) criteria,” he says.
“We did so for investment reasons, because we believe such investments are more likely to deliver stronger performance over time.
“Given this approach, the decision to divest fossil fuel companies and the risks associated with them, and further increase our allocation to high-impact, solutions-oriented companies instead was a relatively easy one, and an obvious next step.”
The fund charges a total expense ratio of 0.99% for institutional class shares and 1.24% for individual investor class shares.
Pax World launched the first socially responsible mutual fund in the US in 1971, and applies ESG filters to all of its investments.
In an interview with Blue & Green Tomorrow in April, Pax World president and CEO Joe Keefe argued that the misconception that considering sustainability means sacrificing financial performance is “finally withering away”.
He also said that firms that engage with sustainability make demonstrably better long-term investments.
“We want to invest in those companies and we want our shareholders to benefit from their vision and their success”, he said.
“Sustainable investing gives investors the opportunity to align their investments with their values while promoting positive social and environmental outcomes in capital markets.”
Earlier this week, the FTSE Group and BlackRock announced the launch of a “ground-breaking” index series that will exclude all companies linked to the exploration, ownership or extraction of fossil fuels.
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