Multi-asset ESG update: Keeping sustainability on track

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.

train on track

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.

The Company

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.

The Challenge

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.

The Solution

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.

Our investment

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.

Key risks

The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency exchange rates. Investors may not get back the original amount invested.

Investments can be made in derivatives, which can be complex and highly volatile. Derivatives may not perform as expected, meaning significant losses may be incurred.

Investments can be made in emerging markets. These markets may be volatile and carry higher risk than developed markets.

Important information

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited ("Aviva Investors"). Unless stated otherwise any opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature.

The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested.

The Aviva Investors Multi‐asset Funds comprise two ranges, each with five funds (together the “Funds”):

Aviva Investors Multi-asset Plus Fund range comprises the Aviva Investors Multi‐ asset Plus Fund I (“MAF Plus I”), the Aviva Investors Multi‐asset Fund Plus II (“MAF Plus II”), the Aviva Investors Multi‐asset Plus Fund III (“MAF Plus III”), the Aviva Investors Multi‐asset Plus Fund IV (“MAF Plus IV”) and the Aviva Investors Multi‐asset Plus Fund V (“MAF Plus V”).

Aviva Investors Multi-asset Core Fund range comprises  the Aviva Investors Multi‐ asset Core Fund I (“MAF Core I”), the Aviva Investors Multi‐asset Fund Core II (“MAF Core II”), the Aviva Investors Multi‐asset Core Fund III (“MAF Core III”), the Aviva Investors Multi‐asset Core Fund IV (“MAF Core IV”) and the Aviva Investors Multi‐asset Core Fund V (“MAF Core V”).

The Funds are sub‐funds of the Aviva Investors Portfolio Funds ICVC. For further information please read the latest Key Investor Information Document and Supplementary Information Document. The Prospectus and the annual and interim reports are also available on request. Copies in English can be obtained free of charge from Aviva Investors UK Fund Services Limited, St Helen’s, 1 Undershaft, London EC3P 3DQ. You can also download copies from our website.

Issued by Aviva Investors UK Fund Services Limited. Registered in England No 1973412. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119310. Registered address: St. Helen's, 1 Undershaft, London, EC3P 3DQ. An Aviva company.

 

Read more fund focus articles