In the latest article in our regular series on how ESG considerations are integrated into our multi-asset investment process, Jerome Nunan explains how an investment in a US rail company supports the transition to a low-carbon economy.
Our previous case studies highlighting how environmental, social and governance considerations are embedded in our investment process have focused on engagement activity, highlighting the importance of active ownership. Here, we bring to life our MAF Plus Fund’s investment in the Aviva Investors Climate Transition Global Equity Fund with this insight on one of it’s current holdings Union Pacific.
Union Pacific is a US rail transportation company, carrying a variety of goods (including agricultural, automotive, and chemical products) across its long-haul routes. Union Pacific Corp:
- Is investing in technology, identifying fuel-saving opportunities and increasing productivity;
- Has sustainability goals that include reducing fuel consumption by 1.5 per cent in 2020.
We live in an increasingly interconnected world, in which by necessity goods and materials are often transported long distances from source to the point of consumption.
Freight accounted for 30 per cent of transport-related emissions
The OECD’s International Transport Forum found in 2015 that freight accounted for 30 per cent of transport-related CO2 emissions, the majority of which is road transport.
Trains offer a carbon-efficient mode of transport that will bring significant benefits as businesses seek to decarbonise their logistics networks:
- A single train can carry the load of more than 280 trucks;
- Rail can move a ton of freight nearly 450 miles with a single gallon of fuel;
- Moving freight by rail instead of by truck can reduce greenhouse gas emissions by 75 per cent.
Union Pacific is a key holding in the Aviva Investors Climate Transition Global Equity Fund, a fund which MAF Plus has recently made a new allocation to.
The AI Climate Transition Global Equity Fund invests in business that support the transition to a low carbon economy as global temperatures rise due to climate change.