Leading ESG specialist Atlas Responsible Investors launches UCITS fund
With sustainability at its core, Atlas was launched in March 2019 by Quentin Dumortier, who served as a captain in the French special forces before becoming a hedge fund manager. He talks to Harriet O’Brien about his ethos and the firm’s new UCITS fund.
You founded Atlas just before the pandemic, what were your initial goals?
I launched Atlas Responsible Investors to offer the first long/short equity strategy radically positioned on responsible investing. I’ve always had a thematic approach to equity investing, and I found that structural sustainability trends were offering fertile ground to source appealing investment ideas. In combination with its fundamental attractiveness, responsible investing is a crucial factor in generating long-term performance. My goal is to capture a source of alpha which comes from long companies that are aligned with major sustainability trends, and short companies that are either going against those trends or are worst in class when it comes to internal ESG practices.
Why have you chosen to launch a UCITS fund now?
Offering a low-volatility absolute returns strategy anchored in sustainability appeals to a wider spectrum than traditional offshore hedge fund investors. After three years of running the strategy in an offshore fund and managed account format, launching a UCITS fund was a natural development. Our unique investment strategy has proven its all-weather resilience throughout turbulent markets, and we met with sustainability-minded investors who were keen to back our UCITS fund launch, namely a Nordic bank and two prominent European family offices.
What are your objectives for it?
Both performance and sustainability are at the very core of our absolute returns fund, which is classified SFDR 9 under the EU taxonomy. Our strategy is based on a rigorous investment process aimed at generating absolute returns irrespective of market conditions. We only invest in companies which align with our 11 sustainable investment goals.
Tell us about the Atlas sustainability goals
Climate, biodiversity and social inequalities are transversal global challenges. Atlas has defined 11 sustainable investment goals that cover the major sustainability challenges, such as energy transition, sustainable food, water preservation, clean mobility, health and education, and are aligned with the United Nations Sustainable Development Goals.
In practice, our long positions are selected from companies that are sustainability pioneers in their sectors and have climate targets aligned with Paris Agreement trajectory. The short positions target companies that are lagging behind in the ecological transition or that are subject to major social or environmental controversies.
We aim to have an impact thesis behind each and every investment, and we engage with companies to make sure they deliver on their promise to accelerate their efforts. We call it “constructivism”. As shareholders, we have a major part to play by engaging with the companies we invest in. We know time is of the essence in the race towards the sustainable development goals.
Do you think sustainability issues are now key to attracting UHNWIs?
A majority of us are now trying to find out how we can contribute within our own jobs to the transition towards a fairer and more sustainable world. Finance is the engine behind the economy and as investment managers we have a crucial role to play in this transition.
UHNWIs are increasingly passionate about global sustainability issues. They are fully aware of the power and responsibility which comes along with their wealth. This is especially the case with the younger generation. Whether they are successful young entrepreneurs or they have inherited their wealth, they are increasingly looking for solutions which go beyond philanthropy. They want to put their money to work in a responsible way and are turning towards impact investment solutions in all asset classes. We were glad to offer the first long/short equity impact strategy.
However, while impact investing has been a very fashionable topic for the last few years, the recent greenwashing scandals in asset management have reminded everyone that intention is not enough. Investment managers are increasingly under scrutiny when it comes to the quality and authenticity of their commitment to ESG. The EU taxonomy and other regulatory efforts are helping elevate the rules but lots of work is needed to help distinguish greenwashed products from genuine responsible investment products.
What impact do you think the situation in Ukraine is having on ESG?
The conflict in Ukraine forced investors to take a stance and show more clarity in their ESG processes. For instance, there has been quite a bit of soul searching within the ESG community regarding exclusions in the defence sector. As a former army captain I know first-hand the importance of access to efficient weapon systems to bring peace in war zones, and the defence industry should not be demonised. Companies involved in Russia also had to take bold stances regarding their activities in the region and it is interesting to see how investors have been looking at these decisions within their ESG investment process. Beyond the humanitarian tragedy, the disruption in energy and global food supply are core challenges that pave the way to much-needed innovation and therefore new investment opportunities.