Invesco has launched the Article 8 Sustainable Eurozone Equity fund in partnership with UBS Global Wealth Management, available to both retail and institutional investors.
The fund will invest in European companies that managers Oliver Collin and Steve Smith believe will benefit from the transition to decarbonise their activities.
The companies picked will be those with the ability to reduce emissions by more than the MSCI EMU index, the fund's benchmark, on a three-year rolling basis.
Supported by Invesco's broader European investment team, the managers will calculate environmental materiality by using traditional financial metrics to assess a company's ability to adapt to a low carbon world.
The managers will engage with management teams to support their analysis and to gauge the company's willingness to change.
Invesco will also measure the reduction in the combined scope 1, 2 and 3 emissions as measured in tonnes of Co2 of the portfolio, and will utilise the same methodology to compare these results to the weighted average emission reduction of the index.
Stephanie Butcher, senior managing director and co-head of investments at Invesco, said: "Strategies that only allow investments in environmental perfection today risks starving capital from companies that can be instrumental in reducing carbon globally.
"The energy transition requires capex, and we believe finding and incentivising companies with the financial ability to fund that transition will unlock the greatest environmental and economic value.
"This new strategy relies on engaging with the large emitters, not excluding them, and through traditional financial analysis will seek to model the materiality and ability for change," she added.
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Philippe G. Müller, head CIO global IM fund investment solutions at UBS Global Wealth Management, said: "Ongoing volatility and uncertainty in markets have emphasised the importance of diversification across but especially also within asset classes.
"Through this collaboration we offer our clients a new fund solution strategy within the sustainable investing universe that focuses on improving companies, an area of the market that has benefited from an increased rotation into value and cyclical strategies."
