Strategy Shares writes that Rob Gough, a portfolio manager for Strategy Shares’ newest ETF NZRO, has experience as an actor and serial entrepreneur, and is well acquainted with the plotlines of action-thriller Hollywood disaster films.
Gough currently co-stars alongside Bruce Willis in the movie American Siege. Yet, despite warnings of a crisis, he knows the future doesn’t have to be all doom and gloom when it comes to climate change, the firm writes.
Over a decade ago, Gough started researching the effects of climate change because he wanted to make a difference. At the time, living in Indianapolis, some friends and family seriously questioned his decision to invest almost every penny he had saved up into a disruptive recycling business to try and make a change for the well-being of the environment. Since then, Gough found a buyer for that recycling company to take it to the next level and has had multiple other business exits along the way, but that thirst for making a significant impact in the fight against climate change never left him.
Fast forward 12 years, he was inspired by the efforts being made by a company named ClimeWorks when he read about them in September 2021. ClimeWorks recently built and opened “Orca,” the world’s largest direct air capture “carbon sucking” factory in Iceland that uses geothermal volcanic power to remove CO₂ from the atmosphere and sequester it beneath the rock layer.
Strategy Shares writes that while many innovators and investors talk about reducing CO₂ emissions in the hopes of slowing climate change, companies like ClimeWorks are actively taking it to the next level with Orca by seeking to reverse climate change and actually reducing excess carbon in the atmosphere.
“This was all great news, yet the math indicates that at least another 39,999 factories like Orca are needed to bring carbon emissions in check and make sure we avert a real-life climate disaster,” the firm writes. Gough discussed his concern for the frightening impact of climate change and potential solutions with David Miller, CIO of Strategy Shares ETFs. The duo understood that investors in the US would need to do their part and act in a more active way than just buying “green” stocks.
Miller and Gough decided to team up and launch the Strategy Shares Halt Climate Change ETF (Nasdaq NZRO), such that profits from the management fees earned by Strategy Shares from NZRO could be invested directly into projects and companies that seek to curb or reverse climate change. The first project for Strategy Shares is to purchase carbon removal services powered by the ClimeWorks Orca plant, an investment which began in January 2022. It is estimated that Orca removes more than 300 metric tons of CO₂ from the atmosphere each month and fuels ClimeWorks’ ambitions towards reversing climate change.
In addition to the impact that Miller and Gough seek to have on the environment through the climate initiatives, they also know that investors need to focus on sustainability for the well-being of their portfolios.
The firm writes that the demand for greener investment products is rising, and this is with good reason.
“With large investors divesting from non-renewable energy sources and retail investors now following their lead, Strategy Shares is proud to offer an alternative approach for green conscious investors. Businesses specialising in electric vehicles, solar inverters, and technology powering remote work and virtual connectivity have seen real success, which the team behind NZRO believes has created investment opportunities. The tailwinds for these growing sustainable sectors of the economy are becoming increasingly obvious.”
NZRO’s investment process begins by seeking out those companies that meet at least one of a set of climate-focused criteria:
Direct commitment to net zero or reduced carbon emissions through a company climate pledge or involvement in such initiatives as the Paris Agreement or The Climate Pledge;
Companies in the energy transition space deriving at least 50 per cent of their respective revenues from activities in electrification, clean transportation, industrial and building efficiency, and other opportunities related to changing the ways in which energy is produced and consumed globally;
Companies deriving at least 50 per cent of their revenues from activities focused on advancing the progress of reducing carbon emissions through alternative energy innovation, technological advancements, climate-conscious value chains and other similar initiatives.
Companies that meet any of the above criteria are then reviewed by the fund’s management team using a rigorous fundamental research approach focused on both their credit worthiness as well as their commitment to climate initiatives, with the final portfolio made up of those companies the team believes have the highest risk/return potential. When a company no longer meets the criteria according to the investment guidelines, the position will be sold.
“The push for net zero will be a defining economic event for the foreseeable future. Companies that are positioning themselves to play a leadership role in carbon reduction aren’t just going to have an impact on our planet, they will be well positioned in the eyes of climate-conscious investors,” says David Miller, Portfolio Manager of NZRO. “We are committed to offering a differentiated product that can hopefully be positioned to not only outperform the market over the long-term but can make a real difference in combating climate change. Investors coming together with a common goal can have a real impact on fixing the climate crisis, and at Strategy Shares we hope to be part of the solution.”
“I’ve been incredibly inspired by the advances in technology that we’ve seen to help push the world to net zero,” says Gough. “We believe that if enough people join this battle with us, we can put up a meaningful and significant fight against climate change before it becomes too late.”
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