Research Affiliates, LLC sister company RAFI Indices announced the launch of the RAFI Multi-Factor Climate Transition strategy, designed for investors who wish to promote responsible environmental management with their investment choices as well as to preserve the potential for long-horizon outperformance.
Katrina Sherrerd, PhD, CFA, President and Chief Executive Officer, Research Affiliates, said:
“At Research Affiliates, we seek to offer index strategies that meet investor preferences and to deliver superior expected returns over a full investment cycle. Our Climate Transition index strategies provide the market with an excellent choice for those who want their portfolios to reflect a commitment to environmental sustainability.”
According to RAFI, the new index strategy aims to provide exposure to value, low volatility, quality, and momentum factors, while integrating objectives related to greenhouse gas emissions reductions and a transition to a low-carbon economy. The firm stated as well that the index is intended to comply with the requirements for the Climate Transition Benchmark as specified by the EU Commission’s Technical Expert Group on Sustainable Finance’s final report on climate benchmarks and ESG disclosures published in September 2019.
Vitali Kalesnik, Partner, Director of Research for Europe, Research Affiliates Global Advisors (Europe), said:
“Carbon emissions data are critical to investors’ increasingly important role in helping combat climate change. Our research finds that reported data are at least 2.4 times more efficient in identifying the worst emitters compared to the estimated data. One of the objectives of the RAFI Multi-Factor Climate Transition Index is to promote incentives for companies to start reporting their emissions.”
Ari Polychronopoulos, Partner, Head of ESG at Research Affiliates added:
“In recent years we have created various index strategies that incorporate ESG metrics into certain index methodologies. We are pleased to provide this latest offering to investors.”