- Advertisement -
- Advertisement -

Related

An Overlooked Approach to Responsible Investing and Commodities

Latest Report

- Advertisement -

Stockholm (NordSIP) – In contrast to public equities and an increasing number of asset classes, responsible investment is not yet particularly well defined in commodities. What types of responsible investment strategies can be used, or how does responsible investment relate to the nature of commodities and their markets themselves? While theoretical approaches often seek to mimic how equities integrate ESG, Columbia Threadneedle Head of Commodities David Donora explains how commodity strategies that encompass real, physical or corporate assets demand practical approaches tailored to the commodities themselves.

Columbia Threadneedle is both a longstanding responsible investor and investor in commodities, particularly futures derivatives, where the scope for ESG integration may appear limited, but where responsible investment considerations are in fact integral to the process and contingent on how they are approached (relative to, say, equity strategies). For Columbia Threadneedle’s commodities investment process, therefore, strategic asset allocation is paramount, considering the diversification potential, hedging benefits and good returns potential of commodities.

One way is to focus an investment approach on the use of commodity derivatives. Negative associations relating to issues in investment in real assets like e.g. labour or human rights, waste, water scarcity and pollution levels in assets (e.g. forests or land), or companies in the supply chain, can be addressed by managing the structuring of a commodity derivatives approach. When tackling food commodities, for example, counterparty exposures in commodity derivatives requires framing the standards and values around which counterparties are assessed, as well as assessing the nature of the commodities and their markets themselves, inviting a positive inclusion process for assets to be approved as investable and allowing for proactive management.

As commodity markets have unique characteristics that constantly evolve over time, Columbia Threadneedle adjusts its portfolios when it relates to an issue like, say, coal as policy changes linked to climate change also continue to evolve and the global energy transition progresses. Renewable energy sources, effective carbon pricing, the switch from oil to gas and the diminishing role of hydrocarbons are all real, tangible commodity investment themes; simultaneously, asset owners already engaged with these transitions will find that an active commodity derivatives strategy provides insurance against potential associated impacts and provides a hedge to help mitigate financial risks – without reversing responsible investment gains.

Read more about Columbia Threadneedle’s responsible commodity investment strategy here.

Picture: (c) by_Zarni_pixelio.de.jpg

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Glenn Leaper, PhD
Glenn Leaper, PhD
Glenn W. Leaper, Associate Editor and Political Risk Analyst with Nordic Business Media AB, completed his Ph.D. in Politics and Critical Theory from Royal Holloway, University of London in 2015. He is involved with a number of initiatives, including political research, communications consulting (speechwriting), journalism and writing his post-doctoral book. Glenn has an international background spanning the UK, France, Austria, Spain, Belgium and his native Denmark. He holds an MA in English and a BA in International Relations.

Latest Articles

Tidan to Launch Confluence, Its Integrated Multi-Strategy Fund

Stockholm-based Tidan Capital is preparing to launch Confluence, a new multi-strategy vehicle that brings the boutique’s internally managed strategies under one umbrella. The fund,...

State Pension Fund of Finland Sees Strong Hedge Fund Gains

The first half of 2025 brought a complex market backdrop shaped by shifting macroeconomic trends, tariffs, geopolitical uncertainty, and volatile investor sentiment. Although returns...

Espiria Rolls Out Long-Only Fund Led by Staffan Östlin

After more than a decade of picking stocks on both the long and short side, veteran fund manager Staffan Östlin is now running a...

The “Magic of Three”: Protean Select Turns Milestone into Major Allocation

Reaching the three-year mark is a key milestone and often a turning point for any emerging hedge fund. For Protean Select, the opportunistic equity...

Twelve Years On, Nordkinn Expands with Two PMs and Advisor

Twelve years after its inception, Nordkinn Asset Management is entering a new growth phase, expanding its investment team with the appointments of Arian Kalantari...

Merger Cleared: Carlsson Norén to Transition Funds to UCITS

After nearly two decades as an independent fund manager, Carlsson Norén Asset Management is joining Meriti Capital, following regulatory approval from Finansinspektionen. Its two...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.