Leverage a broad and deep opportunity set for sustainable investing

Outlook 2023Leverage a broad and deep opportunity set for sustainable investing

Many investors are seeking ways to achieve financial returns while promoting long-term environmental or social value, also known as sustainable investing. It is our belief that focusing on environmental and social issues can often lead to profitable investment opportunities across all sectors and that sustainable investing is not exclusionary. We also believe that directing investment toward companies offering solutions to societal problems can often spur companies to take action to address these issues.

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Barry Gladstein, head of sustainable investing for Public Investments at Macquarie Asset Management shares insights on investment opportunities that exist across all sectors.

Consider the United Nations’ Sustainable Development Goals (SDGs)

The United Nations’ Sustainable Development Goals (SDGs) are often used to define the areas that companies need to target for sustainable investments. The SDGs are a collection of 17 interlinked global goals designed to be a “blueprint to achieve a better and more sustainable future for all,” that address a wide range of issues including poverty, health and education, inequality, and economic growth, in addition to climate and the environment.

Meeting the UN’s Sustainable Development Goals by 2030 could require $5 trillion to $7 trillion per year from the private sector, suggesting a massive impact on capital markets.1

1Source: UN Principles for Responsible Investing: Investing with SDG outcomes: a five-part framework (Introduction), June 2020.

Case studies

SDG 5 – Gender Equality icon

SDG 5 – Gender Equality


5.5 – Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life

Indicator for target 5.5

5.5.1 – Proportion of seats held by women in (a) national parliaments and (b) local governments

Indicator for target 5.5

5.5.2 – Proportion of women in managerial positions

Investment implications

  • Credit Suisse Research found that companies with a higher percentage of women in management typically performed better than those with a lower percentage.
  • The research also showed that the percentage of women in management positions is fairly consistent across sectors and increasing in each sector, indicating that the opportunity to invest in companies promoting SDG 5 should be available across all sectors.

Source: Credit Suisse Research, CS Gender 3000 Report 2021, Refinitiv.

SDG 7 – Affordable and Clean Energy icon

SDG 7 – Affordable and Clean Energy


7.2 – By 2030, increase substantially the share of renewable energy in the global energy mix

Indicator for target 7.2

7.2.1 – Renewable energy share in the total final energy consumption

Investment implications

  • One example of ways that US energy companies are working to accomplish the goals of SDG 7 is in the sustainable aviation fuel (SAF) market.
  • Recognizing the financial opportunity that this demand presents, US energy companies have been making the capital investments needed to increase SAF supply and have recently announced positive developments along this front.
  • Energy companies have also contributed to other renewable energy areas such as geothermal energy, and renewable and biodiesel fuels.

Source: United Nations Global Compact goal index page: Energy “Ensure access to affordable, reliable, sustainable and modern energy.”

Turning insights into action

Investment solutions to consider

Delaware Sustainable Equity Income Fund (IDAIX)

Overall Morningstar ratingTM

Morningstar rating Morningstar rating Morningstar rating Morningstar rating Morningstar rating

The Fund invests in equity securities issued by companies with products, services or practices that align with the UN's SDGs and that we believe have investment profiles similar to the Russell 1000® Value Index.

Learn more

Delaware Climate Solutions Fund (IVEIX)

The Fund invests in securities of US and non-US issuers identified as being capable of reducing, displacing and/or sequestering greenhouse gas emissions or helping others to do so, with a focus on equity securities.

Learn more

Source: Morningstar. Data as of 9/30/2022 unless otherwise noted. Morningstar ranking is based on Morningstar risk-adjusted return measure that accounts for variation in a managed product's monthly excess performance. Past performance is no guarantee of future results.

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The views expressed represent the investment team’s assessment as of December 2022 and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice.

Investing involves risk including the possible loss of principal.

Past performance does not guarantee future results.

Investing with a focus on companies that exhibit a commitment to sustainable practices may result in investing in certain types of companies, industries or sectors that the market may not favor.

Using ESG criteria in the investment process may exclude certain companies for non-investment reasons and, therefore, the fund may forgo some market opportunities available to funds that do not use ESG factors. In addition, because company greenhouse gas (GHG) emissions data are not standardized (and are further subject to estimation error when not company-reported), the data sets the fund must rely on may imperfectly represent companies’ true GHG emissions. Also, the company emissions targets that the Manager sets are based on model assumptions and estimations that carry the inherent risk associated with any modeling or estimating process.

Investing in energy securities may include price fluctuation caused by real and perceived inflationary trends and political developments, the cost assumed in complying with environmental safety regulations, changing demand for different types of energy, changes in methods for conserving energy, the uncertain success rates for exploration projects, tax and other governmental regulations, and other risks associated with generating or distributing energy.

The Delaware Climate Solutions Fund has the flexibility to invest as much as 50% of its assets in as few as two issuers with no single issuer accounting for more than 25% of the portfolio. The remaining 50% of its assets must be diversified so that no more than 5% of its assets are invested in the securities of a single issuer. Because a non-diversified portfolio may invest its assets in fewer issuers, the value of its shares may increase or decrease more rapidly than if it were fully diversified.

Risk is increased in a concentrated portfolio since it holds a limited number of securities with each investment having a greater effect on the overall performance.

The Delaware Climate Solutions Fund’s focus on securities of issuers that seek to reduce, displace and/or sequester GHG emissions or help other to do so may affect the Fund’s exposure to certain sectors or types of investments. The Fund’s relative investment performance may also be impacted depending on whether such sectors or investments are in or out of favor with the market. Certain investments may be dependent on U.S. and foreign government policies, including tax incentives and subsidies, as well as on political support for certain environmental initiatives and developments affecting companies focused on sustainable energy and climate change solutions generally.

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