Redwheel launches Greenwheel sustainability capability

The remit of the Greenwheel team will be to advise, support and provide independent challenge to Redwheel’s seven investment teams, who combined manage $19.8bn (as at 31 December 2022). This will include providing research, sustainability strategies and client perspectives at each stage of the product life cycle for the group’s Enhanced ESG, Transition and Sustainable funds.

Before the launch of a new product, Greenwheel will assist the investment team in shaping the proposition, including advising on frameworks that will support the delivery of the fund’s objectives, and this help will continue after launch.

Redwheel’s investment teams will commission research from Greenwheel to complement their own analysis and inform engagement with investee companies. Greenwheel will also help devise the format for client sustainability reports and provide feedback.

In addition, the Greenwheel team will support new sustainability-focused investment teams who join the business in the future.

Greenwheel will be led by head of thematic sustainability research, Stephanie Kelly, who joined Redwheel from abrdn last year.  She will be supported by a team of specialists with experience from within and outside the asset management industry. Her team includes newly appointed Jessica Wan to lead social research and Paul Drummond to lead climate and environment research. The final member of the team, Anna Polise, joined in 2022 as climate research analyst.

The Greenwheel team will work alongside Chris Anker, Redwheel head of sustainability, who will continue to lead ESG integration and stewardship across the group’s fund range, set and operationalise firm-wide policy and oversee individual ESG approaches within the investment teams.  

The Big Interview with Redwheel CEO Tord Stallvik

Tord Stallvik, CEO of Redwheel, said: “Our investment teams operate with a high degree of autonomy and as such, their approach to sustainability considerations will differ accordingly. Whilst ESG is already fully integrated across all teams, we wanted to create a central, in-house team that would act as a partner, providing the support and challenge necessary to create industry-leading sustainable solutions that meet the demands of our clients. 

“The robust support provided by Greenwheel, coupled with the autonomy we offer to investment teams makes us uniquely placed to offer an attractive home for new investment talent focused on sustainable investment strategies.  We expect this to be a significant area of growth for Redwheel.”

Speaking to Investment Week, Stallvik said Redwheel’s existing teams were already engaging with the Greenwheel team and the product framework they have put in place, highlighting Greenwheel will support fund managers by filling in the gap between academic knowledge and investment knowledge.

He said the launch also evidenced to potential new investment teams that the group is serious about sustainability and is investing in this area.

“We didn’t have any explicitly sustainably-focused investment teams beforehand so there was a clear gap in our range of capabilities,” he said. “It is very much part of the growth plan for the organisation to continue to improve the ways in which we do things, but also add this very clear framework around the sustainable funds that we offer.”

Stephanie Kelly said: “I am incredibly excited about the team of experts we have assembled for Greenwheel.  They will help support the investment teams to not only shape and adapt investment propositions and processes, but also challenge assumptions and understanding when to comes to the complexities of climate science and also crucially, social research which we think is an incredibly important part of how both clients and investment managers think about investing sustainably. 

“A key attraction for me in joining Redwheel last year was the commitment to integrating insight into the way sustainable investment decisions are made and to build products that are highly authentic and have integrity. Work with the investment teams is already underway, and I look forward to the Greenwheel team collaborating with colleagues across the business on the many projects in the pipeline this year.”

Opportunities and challenges

Speaking to Investment Week, Kelly explained Greenwheel has been structured around both research and from a client market regulatory perspective as “you cannot do sustainability without both of those things”.

“One of the challenges we are facing in the market at the moment is that investing for climate change or investing with human rights in mind is a very specialist kind of knowledge,” she said.

“I think one of the things that fund managers have struggled with is how do you apply in practice what can be quite academic insights that you often get from research teams? That is part of what we are there for, but it interacts quite directly with what does the regulator expect? For example, the more you understand about climate science, the more you understand about the potential greenwashing risks to building a fund.”

In terms of providing a framework for product development which ranges from Enhanced ESG through to impact strategies, Kelly said the team has built this in a region agnostic way “that will fit within the existing regulatory regimes acknowledging that they are constantly shifting”.

As well as keeping up with regulatory requirements in different regions, Kelly said it is important to keep reviewing products to check they meet client expectations for what they would expect to see from a particular fund.

She is also excited about development opportunities as Redwheel is operating in areas where there have traditionally been fewer sustainable options available to clients, including value and emerging market strategies.  

“I think there are really interesting challenges, but the crucial thing is getting clients products across the asset class and regional spectrum,” Kelly said.

“I also think the increasing focus on the transition is a really positive step. You are starting to see more regulatory guidelines, but generally in conversation with academics in the space, increasingly there is recognition that the low hanging fruit is only a small part of what we need to do to build a sustainable future, which I think we are really well positioned for.”

In terms of areas of focus for research, Kelly said these will be determined by the needs of the fund managers and what will empower them to make decisions. Although the team has climate research and social research leads, she said it is vital they work closely together as she believes the separation of these areas is limiting to investors.

“For example, we are doing a series for investment managers on renewable supply chains. What are the environmental and social risks and, crucially, what is an investor supposed to do about them? This is going to depend on the mandate they run and this is how we are building the research.”

In particular, she highlighted the Just Transition as a key priority for the team’s research this year and the way they think about the funds, including facing up to difficult challenges and working out the role for investors.  

“There is no transition without a just transition because the backlash will be so strong on investors and in society, and the political backlash will be too strong,” she added.