Erin Bigley, CFA| Chief Responsibility Officer

David Wheeler, CFA| Portfolio Manager—Sustainable Climate Solutions; Senior Research Analyst—Sustainable Thematic Equities

Kent Hargis, PhD| Chief Investment Officer—Strategic Core Equities; Portfolio Manager—Global Low Carbon Strategy

Transcript

Erin Bigley: As equity investors hunt for opportunities, why should they consider climate-focused investing?

Kent Hargis: We see plenty of investments growing in both energy transition, through wind and through solar, also through the growth of electric vehicles, and we expect that to grow much faster than the market over the course of the next 10 years. We also see that in the private sector is supporting or complementing the public sector.

Erin Bigley: David, what are you seeing?

Dave Wheeler: I see government policies, I see technological innovation, I see capital flows really lining up behind the need to address climate change. And so when I think about the investment opportunities, certainly companies that provide solutions to climate challenges should see strong tailwinds for their businesses in the years ahead.

Kent Hargis: So really it is more than just excluding companies that have risk to climate change. It really is taking advantage of those opportunities.

Erin Bigley: How has the landscape for climate-focused investing changed over the past year or so?

Kent Hargis: The US has increased investments in renewables, solar and wind, with the aim of reducing carbon emissions by up to 40%. We also see on the European side, an attempt of similar spending, again focused on increasing renewables. The changes and the constraints here are really around permitting and actually getting the project started, and we're also seeing some advancements and some relaxation of some of the rules to move forward, it's actually getting some of these investments started and getting along the path that we're all aiming for.

Erin Bigley: We've just come out of COP 28. What sort of impact do you think that will have on climate-focused investing?

Dave Wheeler: When I think about not only COP 28, but other policy developments going on around the world, we're really seeing an alignment of political consensus around the need to address climate. And I think they'll result in accelerating capital into solutions to help address the challenges.

Erin Bigley: So can climate-focused strategies perform in a challenging environment?

Kent Hargis: We feel that investing in companies that are very high quality, that are at attractive prices, those companies will do quite well in this environment. So we like companies that have operational excellence, those companies that are still innovating on the quality side. We like companies that have less leverage, those that have very extended pipelines many years out in the future. And those companies that are more diversified in their customer base, so less exposed to a single client to reduce the risk of mispricing or causing issues with profitability.

Dave Wheeler: One thing that I think about is capital going in is not dependent upon economic growth and cycles. For example, over the last four years, which has been pretty bumpy, we've seen the amount of capital going into decarbonization double over that period. So we're seeing secular growth in this area that shouldn't be vulnerable to economic slowdown.

Erin Bigley: So how do you see this space evolving over the next several years?

Dave Wheeler: Along with high inflation, supply chain bottlenecks, rising interest rates, those have been headwinds to performance in climate investments. But as we move forward, I think those are going to move into the rearview mirror and it'll be smoother sailing for climate-related investments.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to revision over time.

Learn more about AB’s approach to responsibility here.

AllianceBernstein

AllianceBernstein

AllianceBernstein (AB) is a leading global investment management firm that offers high-quality research and diversified investment services to institutional investors, individuals, and private wealth clients in major world markets. We believe corporate responsibility, responsible investing and stewardship are intertwined. To be effective stewards of our clients’ assets, we strive to invest responsibly—assessing, engaging on and integrating material issues, including environmental, social and governance (ESG), and climate change considerations in most of our actively managed strategies. We also believe that strive to hold ourselves as a firm to similar practices that we ask of issues. Our stewardship practices, investment strategy and decision-making are guided by our purpose, mission and values.

Our purpose—pursue insight that unlocks opportunity—inspires our firm to act responsibly. While opportunity means something different to each of our stakeholders; it always means considering the unique goals of each stakeholder. AB’s mission is to help our clients define and achieve their investment goals, explicitly stating what we do to unlock opportunity for our clients. We became a signatory to the Principles for Responsible Investment (PRI) in 2011. This began our journey to formalize our commitment to identify responsible ways to unlock opportunities for our clients through integrating material ESG factors throughout most of our actively managed equity and fixed-income client accounts, funds and strategies. AB also engages issuers where it believes the engagement is in the best financial interest of its clients.

Because we are an active manager, our differentiated insights drive our ability to deliver alpha and design innovative investment solutions. ESG and climate issues are important elements in forming insights and in presenting potential risks and opportunities that can have an effect on the performance of the companies and issuers that we invest in and the portfolios that we build.

Our values provide a framework for the behaviors and actions that deliver on our purpose and mission. Values align our actions. Each value emerges from the firm’s collective character—yet is also aspirational.

• Invest in One Another means that we have a strong organizational culture where diversity is celebrated and mentorship is critical to our success. When we invest in one another, we empower our employees to reach their potential, so that they can help our clients realize theirs. This enables us to partner with clients to design and deliver improved investment outcomes.
• Strive for Distinctive Knowledge means that we collaboratively identify creative solutions to clients’ economic, ESG and climate- related investment challenges through our expertise in a wide range of investment disciplines, close collaboration among our investment experts and creative solutions.
• Speak with Courage and Conviction informs how we engage our AB colleagues and issuers. We seek to learn from other parts of our business to strengthen our own views. And we engage issuers for insight and action by sharing ideas and best practices.
• Act with Integrity—Always is the bedrock of our relationships and has specific meaning for our business. Unlike many other asset managers, we’re singularly focused on providing asset management and research to our clients. We don’t engage in activities that could be distracting, or create conflicts—such as investment banking, insurance writing, commercial banking or proprietary trading for our own account. We are unconflicted and fully accountable.

As of September 30, 2023, AB had $669B in assets under management, $458B of which were ESG-integrated. Additional information about AB may be found on our website, www.alliancebernstein.com.

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