Emerging markets fund targets European investors, alignment to six SDGs.
Franklin Templeton has announced the launch of the Templeton Emerging Markets Sustainability Fund, which will invest in companies in emerging markets globally that demonstrate good or improving sustainability.
The fund is managed by Andrew Ness and Chetan Sehgal, co-managers of the Templeton Global Emerging Markets strategy. It is a sub-fund of the Luxembourg-domiciled Franklin Templeton Investments Funds range and will be initially only available to European investors.
The fund will invest in firms whose products and services are aligned to one or more of six positive outcome areas linked to the UN Sustainable Development Goals (SDGs): basic needs, wellbeing, decent work, healthy ecosystems, climate stability, and resource security.
The portfolio will consist of 30-50 stocks with a five-year investment horizon. Components will be selected via Franklin Templeton’s proprietary three-pillar inclusion framework, which measures alignment to positive environmental and/or social areas; intention to maintain or improve ESG footprint of operating model; and transition potential for improvement through active engagement.
Companies involved in weapons, tobacco, coal and unconventional oil and gas extraction, or whose actions have violated the United Nations Global Compact, are excluded from the fund.
“As well as companies that demonstrate good sustainability criteria, we can invest in companies that may be imperfect and create investor impact by pro-actively engaging with these companies to improve. We believe that our core role as stewards of our clients’ capital is to engage in its responsible allocation, management and oversight to create long-term value for our investors,” said Ness.
“The fund adopts a proprietary framework that reflects key emerging market megatrends such as demographic shifts, urbanisation and technological innovations, which open up new opportunities from improving awareness of sustainability issues in emerging countries,” said Julie Moret, Global Head of ESG at Franklin Templeton.