Marco Lo Blanco

Nanuk Asset Management (Nanuk), a specialist global equity manager, has appointed Marco Lo Blanco as Portfolio Manager and Mark Jordan as Senior Business Development Manager to support the firm’s continued growth and the increasing demand from financial advisers, not for profits and family offices for investment strategies aligned with the accelerating transformation of the global economy.

As industries respond to the increasing tension between economic growth and resource constraints, investors are seeking exposure to companies driving this transition. Nanuk’s investment approach focuses on generating strong investment returns from companies benefiting from the global trends towards greater digitalisation, electrification, efficiency, decarbonisation and sustainability, helping advisers position their clients’ portfolios for the structural shifts reshaping global markets.

Marco Lo Blanco brings 12 years of experience in global equities, having worked across Asian, European, and US markets. Previously, he was a portfolio manager and research analyst at London-based boutique asset manager Seilern Investment Management, where he co-managed the Seilern World Growth Fund, which peaked at USD 3 billion in assets under management (AUM). His expertise in global equities will help strengthen Nanuk’s investment capability.

Mark Jordan joins Nanuk with over 25 years of experience in financial services distribution, most recently as Head of Distribution at Prime Value Asset Management. He has held senior roles at Magellan Asset Management, Fidelity International, and Perpetual, where he played a key role in deepening relationships with financial advisers and investment consultants . Mark joins Melbourne based Senior Business Development Manager Matthew Kent and Business Development Manager Rory Irvine, and his appointment reinforces Nanuk’s focus on engaging with the adviser and investment research community.

These appointments further strengthen Nanuk’s experienced investment and distribution team, led by Chief Investment Officer Tom King and Head of Distribution Dan Powell.

Tom King, Chief Investment Officer at Nanuk, commented: “The global economy is undergoing significant and ongoing transformation as industries adapt to resource constraints, sustainability challenges, and technological change. Investors are increasingly recognising that capitalising on these shifts requires a forward-looking approach, and we are committed to helping advisers position their clients in line with these developments.”

He added: “We are seeing strong demand from advisers and family offices who want investment solutions that align with these global shifts—whether it’s artificial intelligence, electrification, or advances in resource efficiency. Our focus remains on delivering good investment outcomes through a pragmatic, research-driven fundamental approach.”

Recognising this demand, Nanuk launched the Nanuk New World Fund’s hedged unit class as an active ETF in October 2024, providing listed access to its currency-hedged strategy.

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Tom King

Nanuk Asset Management (Nanuk) is pleased to announce the Nanuk New World Fund (Currency Hedged) Active ETF listing. This class of units will now utilise a dual access mechanism, providing investors access to the fund via the listed and unlisted channels.

Tom King, CIO at Nanuk Asset Management, said: “The move to launch the Nanuk New World Fund’s hedged unit class as an ETF has been driven by adviser demand for listed access to the currency hedged version of the Fund, launched last year, which has attracted solid support from advisers and investors.”

The Nanuk New World Fund has a strong track record over nearly a decade and is likely to be well suited to many client portfolios. Its differentiated portfolio seeks to provide diversification benefits and alignment with likely future structural changes in the global economy. The strategy’s ETF quotation provides an actively managed, currency hedged version as an alternative to using passive hedged strategies.

The Fund provides investors with exposure to a diversified portfolio of listed companies that are assessed to be benefiting from, or contributing to, improving global environmental sustainability and resource efficiency.

Investment is primarily in areas such as clean energy, energy efficiency, industrial efficiency, advanced and sustainable materials, waste management, recycling and pollution control, food and agricultural productivity and healthcare technology.

Nanuk Asset Management was established in 2009. The firm is an industry leader in thematic investing and focuses on sectors that are benefiting from the changes in the global economy necessary to address the increasing tension between ongoing economic growth and longer-term sustainability.

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Marie Miyashiro

Nanuk Asset Management (Nanuk), an industry leader in sustainable investing, predicts the performance of Japanese equities in 2024 to be underpinned by structural changes, as corporate government improvements make the market more attractive to investors, despite fears that the nation is slipping into a recession.

Last year, the Tokyo Stock Exchange (TSE) revamped its market restructuring rules. Among the measures was the requirement for listed companies to ‘comply or explain’ if the stock is trading at a price to book ratio below one. These companies need to disclose their plans for improvement, with the view towards how they can increase their long-term corporate value.

Portfolio Manager at Nanuk Asset Management, Marie Miyashiro, believes this reform is a key driver in the market’s ongoing push towards improving Japanese corporate governance structures to advance both business and investor outcomes.

“Listed Japanese companies are now more committed to improving their corporate governance and materialise shareholder value. For investors, this creates an opportunity to benefit from improved corporate financial performance and a higher stock market multiple,” Ms Miyashiro said.

Ms Miyashiro also noted that there has been an acceleration in the unwinding of cross shareholdings among listed companies. This should encourage further foreign investment into the market.

Additionally, the recently revamped Nippon Individual Savings Account (NISA) program further incentivises domestic households to invest in equities. Initially introduced in 2014, the Japanese Government initiative allows equity investments in a tax-exempt NISA account for a lifetime, which Ms Miyashiro notes as an additional driver of domestic retail market participation.

“Given that only around 15% of the local population have taken out of one these accounts, there remains a significant scope for growth, as the Government continues to look at ways to incentivise residents to invest towards their retirements.”

The strength of the Japanese equities market comes as the nation’s economy slips into a recession following the contraction of GDP for two straight quarters.

“Fears around recession will likely prolong a stimulative monetary policy in Japan, resulting in a prolonged weak yen environment, benefiting exporters” Ms Miyashiro said.

In line with Nanuk’s investment philosophy focused on sustainability, Ms Miyashiro is seeing value across multiple sectors and companies within the market. This includes Advantest, a leading manufacturer of testing equipment for the semiconductor industry, as well as Murata, a global leader in ceramic capacitors used in many electronic devices including smartphones, automobiles and datacentres.

“We see other opportunities in the market that we continually assess to potentially add into our portfolio.”

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John Lobb

Nanuk Asset Management (Nanuk), an industry leader in sustainable and responsible investing, this week announced the appointment of John Lobb as a Portfolio Manager. The appointment adds further resources to Nanuk’s experienced investment team which is focused on opportunities arising from the long term trends associated with environmental sustainability and resource efficiency.

With over 32 years experience as an equities analyst and portfolio manager, Mr. Lobb brings a wealth of experience to Nanuk. Prior to joining Nanuk, he served as a Global Equities Portfolio Manager and Senior Analyst at Insync Funds Management. Previously, he has also held key investment positions at Orion Asset Management, Credit Suisse Global Asset Management, and Citigroup Global Asset Management.

Mr Lobb joins an experienced investment team at Nanuk which includes Chief Investment Officer, Tom King, London based Portfolio Manager Binya Even, along with Australian based Portfolio Managers Jane Henderson, Tristan Patience, Peter Wilmshurst and Marie Miyashiro.

Mr King commented, “We are delighted to have John joining our team. His focus on identifying quality, undervalued businesses benefitting from structural tailwinds is very well aligned with our approach. He is well known to us having previously worked with Tristan and Nanuk director Tim Ryan.”

“John’s experience will improve our capacity to research the expanding numbers of opportunities related to the emerging ‘sustainability revolution’ and his focus on quality and growth will complement the approaches of our existing team.”

“It is an exciting time for sustainably themed investment, with technologies such as electric vehicles, renewable energy and the internet of things moving from infancy to maturity and new opportunities emerging in areas such as hydrogen, carbon capture and storage and artificial intelligence,” Mr King said.

Nanuk recognises that environmental challenges present both opportunities and risks for investments. The recent breaking of global temperature records, with average global temperature reaching 17C this month, surpassing the previous record of 16.9C set in August 2016, serves as a clear reminder of the likelihood of further government support for more sustainable technology as we move through this decade.

Dan Powell, Head of Distribution for Nanuk, commented, “Investor and financial adviser demand for sustainable investment continues to grow due to several key factors. Investor preferences, regulatory mandates, corporate pledges, increasing recognition that climate factors impact investment performance, and that significant change at a global level creates investment opportunities and risks which all contribute to this trend”.

Mr Lobb holds a Bachelor of Economics Majoring in Finance and Accounting from Macquarie University and a Graduate Diploma in Applied Finance and Investment through FINSIA.

Mr Lobb is based in Sydney and started with Nanuk on 17 July 2023.

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Tom King

Nanuk Asset Management (Nanuk), an industry leader in sustainable investing, expects significantly more aggressive action in the coming decade by governments and corporations to achieve 2030 carbon emission reduction targets and drive significantly faster decarbonisation towards 2040, which will open new opportunities for investors.

This prospect was heightened by a lack of progress at the recent United Nations COP27 meeting in Egypt which failed to deliver more ambitious commitments or action to reduce fossil fuel usage and reduce emissions.

The most recent Global Carbon Budget Report, released during COP27, found world carbon dioxide emissions from burning fossil fuels were on track to rise around 1% this year. The report laid bare the widening gap between the promises governments, companies and investors have made to cut planet-warming emissions in future years, and their actions to date.

Chief Investment Officer of Nanuk Asset Management, Tom King said the implication is that as we move through the current decade, we are going to see a series of significant changes in policy towards more aggressive action to meet the greenhouse gas emission reduction targets many governments and corporations have set for 2030 and to steepen the trajectory of emissions reductions in following decades.

Mr King said there was growing evidence everywhere of climate volatility consistent with the science and this meant things were likely to continue to get worse in coming years, with greater risks of major climate events.

“Over the coming years we will see a series of step changes in policies to achieve a significant reduction in carbon emissions. That’s likely to be favourable for a lot of the areas we invest in,” Mr King said.

Mr King said there had already been a significant increase in government support for sustainable technology in 2022, led by the passing in the U.S. of the Inflation Reduction Act and the Bipartisan Infrastructure Law.  While in Australia the new Labor Government’s commitment to a 43% carbon emissions reduction on 2005 levels by 2030 added to the pressure.

He pointed out that the growing use of technologies like renewable energy, electric vehicles and hydrogen power will only help address about a third of overall global carbon emissions although that will still mean significant growth in demand for these products.

However, Mr King said to get to the more aggressive targets most governments are currently aiming for by 2030 will require not only more rapid progress in these areas, but investment in the  decarbonisation of many of the currently hard to decarbonise sectors.

“You need to eliminate the use of fossil fuels in buildings, primarily for heating. You need to deal with transport other than passenger electric vehicles, like rail, air and shipping. You need to deal with the big block of emissions coming from industries like cement and steel producers. And you will need to see a greater use of carbon capture and storage by energy companies,” Mr King said.

“As we move though this decade towards 2030, the investment market will start to react to this. It’s only a matter of a few years.”

Mr King predicted there would still be an ongoing boom in the solar industry, potentially a “staggering growth” in the offshore wind industry and further rapid take up of energy storage products and electric vehicles.

Government support for the development of hydrogen projects was also flourishing. “Governments have committed to provide over US$10 billion per year to support the development of green hydrogen projects around the world,” he said.

“The scale of the industry is expected to grow dramatically this year,” he said while noting expectations around pure play hydrogen stocks were currently unrealistic and these stocks had underperformed.

The next big trends though, those which will be far more prominent in 3-5 years’ time, are led by the desire to fully decarbonise the production of electricity and the ongoing “electrification of everything,” Mr King forecast.

Carbon capture and storage, the decarbonisation of air and ocean transport and the adoption of greater recycling and reuse in a more circular economy were areas likely to be seeing a dramatic escalation of investor focus within the next few years, he said.

“Right now we see an increasingly interesting set of opportunities in areas like wind energy equipment makers, grid technologies like metering, component suppliers involved in vehicle electrification, and selected semiconductor companies, sectors that have underperformed this year but for which the medium term outlook has improved.  While these areas have become better understood by the market in recent years, we think there is a much broader set of less well understood opportunities that are yet to be widely recognised.”

Nanuk is one of the few Australian asset managers dedicated to investing in industries related to global sustainability and resource efficiency. The Nanuk New World Fund enshrines this investment outlook and is now accessible as an Active Exchange Traded Managed Fund (ETMF) on the ASX, as well as via direct application and IDPS platforms. The ASX code is NNUK. According to Morningstar’s Q1 2022 Sustainable Investing Landscape for Australian investors Nanuk was one of a few fund houses to dominate first-quarter flows.

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Marie Miyashiro

Nanuk Asset Management (Nanuk), an industry leader in sustainable and responsible investing, has appointed Marie Miyashiro to the newly created role of Senior Investment Analyst as the firm experiences strong growth.

Marie Miyashiro has over 20 years of experience in global equities research and was most recently Global Equities Analyst at Platinum Asset Management Limited. Prior to Platinum Asset Management, Ms Miyashiro has also previously held roles at AMP, Credit Suisse and Citi Research.

Nanuk Asset Management is exclusively focused on sustainably themed responsible investments – specifically, investing globally in listed companies whose activities and practices contribute to or benefit from the transition to greater global sustainability.

In 2022, Money Magazine recognised the Nanuk New World Fund as ‘Australia’s best international shares ESG fund’ and in March 2022 the Nanuk New World Fund was listed on the ASX as an exchange traded managed fund under the ticker code NNUK.

Paul Chadwick, Managing Director of Nanuk Asset Management, said that in addition to Marie’s strong experience in global equities she also has extensive expertise in the Asian equities sector, particularly in Japan, as well as extensive experience with infrastructure and utility projects. This will extend Nanuk’s footprint in these growing markets.

“Investing in areas related to sustainability shows no signs of slowing down. Our focus is global and the ongoing expansion at Nanuk comes as we continue to see an increase in investors and advisers seeking global equities strategies that deliver both strong returns and positive environmental benefits,” Mr Chadwick said.

I am delighted to have Marie join our talented team. Marie provides further depth to the Nanuk investment team as she brings highly valuable insights into the global equities market from a career spanning over two decades. Her deep knowledge and understanding of the market will play a pivotal role in our active approach moving forward.”

Marie joins a talented investment team at Nanuk which includes Chief Investment Officer, Tom King, London based portfolio manager Binya Even, along with portfolio manager’s Jane Henderson, Tristan Patience and Peter Wilmshurst.

Marie holds a Bachelor of Commerce from the University of New South Wales and is also a Chartered Financial Analyst. Marie is based in Sydney and started with Nanuk on August 16, 2022.

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A growing global awareness of the impact of plastic packaging is changing customer perceptions.

Nanuk Asset Management (Nanuk), an industry leader in sustainable investing, believes environmentally focused packaging companies are set for solid growth.

The expansion in e-commerce activities and the shift away from plastic towards alternatives like paper and cardboard is increasing, with current valuations for many stocks in this sector yet to reflect the changed outlook.

Peter Wilmshurst, Portfolio Manager of Nanuk Asset Management, said: “Many current packaging products are creating an environmental waste problem while generating greenhouse gases in their production and use.”

The UNEP estimates that approximately 36 percent of all plastics produced are used in packaging, including single-use plastic products for food and beverage containers, with around 85 percent of them ending up in landfill or finding their way into the world’s oceans.

“Plastics are the largest, most harmful and most persistent fraction of marine litter, accounting for at least 85 per cent of total marine waste,” the UNEP said in a report released last year.^[1]

The global production of primary plastic is forecast to reach 1,100 million tonnes by 2050 if historical growth trends continue, amid a worrying shift towards single-use plastic products, according to the UN Environment Programme,

Governments around the world, from India and China, to the European Union and the United States, are increasingly taking action to cut the use of plastics in the community. Companies are responding by switching to more environmentally friendly products.

“Thanks to a growing global awareness of the impact of plastic packaging, customer perceptions are rapidly changing and there is growing concern about the end disposal of plastic and what it means. This means that a large proportion of consumers are changing their behaviour towards the use of plastics, especially when out shopping,” Wilmshurst said.

In Australia, the Federal Parliament recently introduced the Climate Change Bill 2022 to provide a 2030 emissions reduction target, further highlighting the importance of sustainability and limiting carbon emissions for consumers and industries across the nation.

Seven out of eight Australian states and territories have already committed to ban single-use plastics., with Tasmania being the only state that has not yet committed to banning single-use plastics.

“There is a significant move from plastic to paper and cardboard products. We see this as an accelerating, sustainable trend. Product innovation in paper packaging is significantly expanding the range of uses for paper-based packaging, replacing plastic being the key aim.  This is expanding the sector whilst also encouraging prospective investors,” Wilmshurst said.

E-commerce is another area driving demand for more sustainable packaging. The use of corrugated boxes, in part to ship food and drink and sensitive electronic products, began accelerating from 2009. This coincided with the growth of e-commerce businesses, like Amazon, which have been accelerating over the past decade.

Nanuk does not believe the growth in e-commerce nor the shift away from plastics will trigger a massive growth in sustainable packaging companies as plastic remains a cheap form of packaging that is critical in reducing food wastage due its barrier properties.

“We think two to three percent annual growth is more likely, which is not going to give the companies concerned a Tesla-style multiple,” he said.

However, Nanuk believes this level of industry growth will help prices increase and require higher returns in the industry to justify new investment in paper mills and other production capacity.

“The shift from no growth to a little bit of growth really flips the switch on the returns you can expect from this industry,” Mr Wilmshurst said.  “The industry consolidation we’ve seen should provide further support for returns.”

As a result of this improving outlook for more sustainable packaging products, Nanuk has a position in U.S.-based corrugated packaging company WestRock, America’s second largest packaging company, and Fortune 500 company Graphic Packaging International.

In the same sector, the Nanuk New World Fund also holds a stake in Packaging Corporation of America, which focuses on sustainable and environmentally friendly packaging material. It also holds European multinational paper and packaging group Mondi Plc and aseptic packaging leader SIG Group AG.

Around 10% of the Nanuk New World Fund portfolio is invested in these sustainable packaging companies which it believes are set for solid future growth but where current valuations do not reflect the positive business outlook.

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[1] From Pollution to Solution: a global assessment of marine litter and plastic pollution. https://www.unep.org/resources/pollution-solution-global-assessment-marine-litter-and-plastic-pollution

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Paul Chadwick

Nanuk Asset Management, an industry leader in sustainable and responsible investing,has announced the launch of its new Impact Calculator.  The Impact Calculator provides a personalised view for investors allowing them to estimate the individual impact of their investment in the Nanuk New World Fund.

The Nanuk Impact Calculator provides investors with an easy-to-use digital tool for calculating the involvement of underlying investments across: Education, Food Production and Distribution, Healthcare, Renewable Energy, Waste Management and Recycling, and Water Supply and Treatment.

The underlying data for the Impact Calculator is provided by Sustainable Platform, an independent research company and one of the world’s leading sustainability data providers. The Impact Calculator utilises Sustainable Platform’s proprietary categorisation of companies’ revenues to estimate the revenue associated with selected Sustainable Development Goal targets. The methodology captures direct and indirect contributions of companies.

Nanuk Asset Management is exclusively focused on sustainably themed responsible investments – specifically, investing globally in listed companies whose activities and practices contribute to or benefit from the transition to greater global sustainability. According to Sustainable Platform, the Nanuk New World Fund provides 14% higher contribution to UN SDG’s, 9% lower Greenwashing Risk and 19% lower Reputation risk than their broad coverage of global equities.

The momentum behind interest in ESG and sustainable assets amongst investors and financial advisers in Australia shows no signs of abating. According to a report released yesterday by the Responsible Investment Association Australasia (RIAA), responsible investing assets are growing at 15 times the rate that overall Australian professionally managed investments have grown.

The 2021 RIAA report provides the most comprehensive review of the responsible investment sector and highlighted that only one quarter of investment managers are practicing a leading approach to responsible investing. Nanuk Asset Management has been recognised as one of the top 10 responsible investment leaders’ by RIAA in the 2021 report. This acknowledges Nanuk’s commitment to responsible investing; their explicit consideration of environmental, social and environmental factors in investment decision making; their strong and collaborative stewardship and their transparency in reporting activity, including the societal and environmental outcomes being achieved by the firm.

Chief Investment Officer of Nanuk, Tom King said: “Australians increasingly want to direct their investments towards companies that are helping to deliver social and environmental benefits as well as providing a decent return on their investment. But investors have little insight into how effective those investment funds are in achieving that.  Sustainable Platform’s data allows us to present a clearer picture of the areas in which our investments are contributing.”

Nanuk Asset Management is one of the few Australian asset managers dedicated to investing in industries related to global sustainability and resource efficiency. Nanuk invests only in companies whose activities materially contribute to improving global sustainability. Nanuk Asset Management recently reached the $500 million assets under management milestone. 

Key to preventing greenwashing are transparency tools

As many investment firms attempt to ride the ‘green wave’, Nanuk highlights the risks of products not providing what investors believe are increasing and therefore there is a greater need for transparency and new tools to ensure funds don’t misrepresent the nature of their investments and the extent to which they are invested in sustainable solutions as opposed to just avoiding areas such as fossil fuels.

“With the proliferation of products claiming ESG credentials, the industry needs to be more accountable and improve the reporting on how their funds are delivering on the promise of their responsible investment approaches.  ESG terminology is confusing, reliable data is scarce and there is no consistent way for investors to know who is spinning a story and who is walking the talk.

As the rapid growth in ESG investments accelerate we believe investors will increasingly demand greater transparency on the alignment of their investments with their expectations. The Nanuk Impact Calculator provides both an independent assessment of the involvement in specific areas as well as a simple and easy to relate to the illustration of the significance of these amounts.” concluded Mr King.

Paul Chadwick, Managing Director at Nanuk Asset Management, said, “This $500 million milestone is representative of the growing recognition that investment in areas aligned with improving global sustainability can also deliver strong investment outcomes.”

“At Nanuk we are very proud of our recent recognition by the RIAA as a ‘responsible investment leader’ and the development of the new impact calculator as a user-friendly complement to existing ESG reporting. We strongly believe that our focus on sustainable investing will help us continue to deliver better outcomes for investors”.

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Eric Siegloff

Fund commentary

Over the March quarter of 2019 the Fund posted a 12.8% return, outperforming its benchmark index by 0.5% and outperforming the MSCI All Country World Total Return Index by 1.7%. In March the Fund rose 0.9%, slightly underperforming its benchmark (by 0.6%) and traditional global benchmarks by a lesser amount.

The Fund’s exposure to cyclical end markets such as the automotive, industrial and semiconductor sectors was further reduced as markets continued to rise during the month.  New investments included businesses with more stable economic drivers.  Hain Celestial, one such business, sells natural and organic foods, with Linda McCartney vegetarian foods among its best-known brands.

The Fund also acquired holdings in two businesses in information services. These were Wolters Kluwer and RELX, also known as Reed Elsevier. Both companies trace their history to publishing physical books and journals. With physical printing in decline over decades, both companies changed their focus to provision of electronic information and, increasingly, value-add analytics services. These help customers improve operational efficiency but also make better strategic decisions. The customer base is diverse but professional and regulated sectors including finance, law and medicine are major end-markets. With cloud services and machine learning improving access to and analysis of data, information services is experiencing improving organic growth, modestly supplemented by bolt-on M&A.

The largest performance contributor in March was Stericycle Inc, which rose 20% after announcing a CEO transition. Stericycle provides specialist waste management, focused on medical and office waste, is the clear leader in its sector, but has significantly under-performed under the watch of its exiting CEO. His succession by a well-qualified external hire has been welcomed by the market.  Other significant contributors included global consulting and professional services firm Accenture and Austrian sustainable textile manufacturer Lenzing.  The primary detractors reflected the weak European macroeconomic environment mentioned above in the automotive and European industrials segments.

At the end of March 2019 the Fund’s largest sector exposures are in the industrial internet of things, building energy efficiency, high speed rail, advanced and sustainable materials, waste management, health technology and the wind energy sector.

Notes (1) Inception date 2 November 2015 (2) Benchmark return is the FTSE Environmental Opportunities All Share Total Return Index in Australian dollars (3) MSCI ACWI return is the MSCI All Countries World Index Total Return Net Index in Australian dollars

Market commentary

Global equities continued their strong start to 2019, with the MSCI All Country World Total Return Index rising by 1.3% in March.  The US S&P 500 index was up 1.8%, Europe’s Stoxx 50 index appreciated by 1.6%, and Hong Kong’s Hang Seng index rose 1.5%. Japan’s Nikkei 225 was a laggard, falling 0.8%.  The notable macroeconomic development was weakness in Europe, with Europe’s manufacturing PMI falling further (to 47.5), signalling contraction.  Germany’s 10-year bond yield fell back into negative territory, and the euro fell to its weakest level against the US dollar since early 2017.

Environmental equities performed in line with broader markets, with the Fund’s benchmark, the FTSE Environment Opportunities All Share Total Return Index, rising 1.4% in US dollar terms and 1.5% in Australian dollar terms.

Industry commentary

The increasingly rapid shift away from traditional carbon-based (fossil fuel) energy was highlighted during March.  Oil and gas major Shell announced its plan to become the world’s largest electricity producer within 15 years, with anticipated investment of up to $2 billion a year in its new-energies division.  The announcement comes after a string of recent investments in battery and grid management technology by the company.  The bold strategic shift is driven by the “irreversible choice the world has made to decarbonise, to address climate change, and to go to a net-zero energy system”, according to the director of Shell’s integrated gas and new energies division. “Most of our customers … will in the coming decades only be using electricity”, an assessment consistent with the increasing importance of electricity in the overall energy mix and the relative ease of decarbonising electricity when compared to other sources.  This trend was highlighted by a UK government announcement that fossil fuel heating systems will be banned from new homes by 2020.

In a similar vein, Australian insurer QBE has announced that it will cease insuring new thermal coal mines and power plants from July 1 2019 and will shut down its thermal coal underwriting business by 2030.  Switzerland’s UBS also said it would cease offering project finance for new coal plants. Norway’s sovereign wealth fund announced $7.5b of divestments from Oil & Gas producers, while France’s BNP Paribas, announced plans for $1b of divestments of companies that derive more than 10% of revenue from thermal coal from its actively managed funds, starting in 2020.  German utility E.On unveiled its long-term EV strategy, with offerings for both retail and commercial retail customers covering charging infrastructure, monitoring software and even a special “green energy tariff”.  In the US Duke Energy announced plans for 2,500 charging stations in its service territory, of North Carolina.

Continued progress in renewable energy was highlighted in BNEF’s semi-annual report comparing the “levelized cost of energy” delivery by different technologies.  The latest analysis showed average cost of offshore wind-generated electricity falling by 22% since the prior report. The global average cost of onshore wind generation fell 5% in the same period.  These cost declines were reflected in a range of new wind projects announced across the world.  Wind turbine manufacturer Vestas, a company owned by the Fund, released details of what it calls Britain’s first unsubsidised project, a 47MW in Scotland, due to be completed in 2021. Australia approved an exploration license for what would be its first offshore wind farm, off the coast of Victoria, with Energy Minister Angus Taylor highlighting offshore wind’s relatively high reliability. Wind also won 100% of Finland’s first technology-agnostic energy auction.  In China, restrictions on the development of new wind farms in northern regions are being eased as curtailment rates fall in response to new transmission infrastructure and policies to promote the usage of renewable generation.  The Chinese wind market is expected to grow around 20% this year.

The increasing attractiveness of battery energy storage was also highlighted, with US utility NextEra Energy, a company owned by the Fund, announcing the development of a 900MWh capacity battery storage system in Florida.  The battery system, which is four times larger than the worlds largest system today (South Australia’s Hornsdale Power Reserve) will be attached to a 75MW solar project and will allow generation to be utilised to meet peak demand.  It will assist in the accelerated retirement of two gas fired generating units.  The project and others like it will complement NextEra subsidiary Florida Light & Power’s “30 by 30” strategy to install 30 million solar panels in Florida by 2030, making it a global leader in the adoption of solar energy.

The automotive industry’s transition towards electrification, autonomy and mobility services continues unabated despite a cyclical slowdown in global automotive sales. China announced that subsidies for EVs would be reduced by around 50% in 2019, reflecting the growing maturity of the sector and competitiveness of new EV models.  EV sales are forecast expected to rise 50% YoY in China, despite the lower support and required higher technical standards to qualify for subsidies.

Volkswagen announced a €2b investment plan for its light commercial division, including the rollout of an electric van, the ID Buzz, by 2022. VW’s Porsche unit raised production plans for its debut electric model, the Taycan, after stronger than expected demand by customers who registered to purchase the car via a €2,500 deposit.  The broader impact of technology on the industry was also highlighted by Volkswagen’s announcement that it would cut 7,000 jobs over 5 years and invest over $5 billion in new information technology equipment and systems primarily to digitise routine manual tasks in the company’s administration offices.

Germany’s Daimler AG extended its investment in autonomous driving technology with the €500m acquisition of Torc Robotics, which focuses on commercial vehicles, in which Daimler is the global leader. Daimler also announced that its Smart brand would become all electric brand from 2020, and be run in joint venture with Zhejiang Geely, its largest shareholder and main shareholder of Chinese automaker Geely.  March also saw the IPO of ride sharing app Lyft Inc, at a valuation of ~$20b.

In policy news, the Trump administration’s initiative to restore Oil & Gas drilling rights in sections of the US Atlantic and Arctic coasts (accounting for 30 billion barrels of oil equivalent previously blocked by the Obama administration) was rejected by the courts.

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Dan Powell

The Nanuk New World Fund returned 4.9% in January, outperforming traditional global equity benchmarks such as the MSCI ACWI which rose by 4.2% (all returns quoted in AUD unless specifically stated otherwise).

Some points covered in the report:

• Which country recently announced a hugely ambitious target of 500GW of renewable generating capacity by 2030.  (Note: 1GW is the typical capacity of a large coal or nuclear fired power station).
• The CEO of the world’s leading offshore wind turbine manufacturer said the offshore wind sector was at a tipping point: 400 turbines expected to be built by the company in 2019 – more than the previous 8 years combined.
• California’s largest utility filed for bankruptcy protection: it had over US$70bn in assets at its last reporting date.
• Sectors expected to see strong growth in 2019.

Please follow this link for the latest Fund report (PDF).

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