Global Equity
Low Carbon

A diversified strategy that avoids fossil fuels and favours firms that are managing and mitigating their contribution to climate change and supporting the low-carbon transition.

Reasons to invest

Strong foundation

Launched in March 2016, the Strategy builds on the core investment process of the Global Equity Strategy, which has its inception in December 2007.

Fundamental focus, systematic execution

We employ systematic analysis to identify companies with the most attractive combinations of fundamental characteristics.

Style agnostic

We believe analysing companies across a broad range of perspectives helps to generate positive returns in various market environments and defend against large swings in style.

ESG supports long-term returns

Companies managing their ESG risk have historically outperformed, while those that are improving can generate greater shareholder value in the future.1

Risk management

Proprietary risk management tools enable the team to monitor and neutralise macroeconomic risks before they impact returns.

1ESG Investing: How Covid-19 accelerated the social awakening, by Federated Hermes, published November 2018
Louise Dudley

Climate change is a universal challenge and capital markets have a key role to play in turning ambition into action on climate change. We believe those companies that are ahead of the trend should flourish.

Louise Dudley
- Portfolio Manager, Global Equities

Why Global Equity Low Carbon?

By avoiding companies that are unwilling or unable to mitigate their contributions to climate change, favouring those that are managing their impact on the climate – and engaging with companies to create credible climate strategies – we are able to allocate capital towards lower carbon intensive assets, thereby supporting the transition to a greener world.

The team has conducted pioneering research linking ESG to investment performance, which has led to the creation of leading-edge proprietary tools, such as the QESG Score and ESG Dashboard. This research also underscores our belief that companies less exposed to ESG risks will outperform over the long term, while those that are improving their ESG profile can unlock significant shareholder value. To learn more about our approach to ESG integration, click here.

The Strategy is aimed/aims to generated consistent returns and to outperform its benchmark in any market environment. Consistency is achieved by investing in a diverse range of companies with strong, long-term fundamentals and ESG characteristics. This helps defend against swings in style and means clients are not required to time their entry point to benefit from a particular factor tailwind.

How we invest

Pragmatism over perfection
Systematic analysis
Risk management

Investment philosophy

It is our belief that companies that better manage their environmental impact will achieve better outcomes. Somewhat simplistically, they are likely to be less prone to costs from adaptation or from regulation, less at risk from the effects of climate change and also likely to achieve reputational benefits across all stakeholders. We, therefore, avoid companies that have material exposure to fossil fuels and a high carbon intensity, or are unwilling or unable to mitigate their contributions to climate change. Instead, we favour firms with a combination of attractive financial characteristics that are better at managing those risks and opportunities, that support the transition to a low-carbon economy or are adapting in order to minimise their impact on the climate.

This approach allows the team to hold stocks over the long-term; it is only long-term thinking that enables a company to fulfil its potential to benefit society and the planet, its employees and the local communities in which it operates.

Investment process

Global Equity Low Carbon - infographic

We use a systematic approach, driven by our Alpha Model, which seeks to identify companies with an attractive combination of fundamental characteristics and ESG behaviours. This is combined with a disciplined subjective analysis to identify potential weaknesses not captured by the model, including analysis of environmental, social and governance factors, using the ESG Dashboard. A company’s environmental attributes are assessed using industry-specific KPIs, as well as a climate change risk framework, controversies and the UN SDGs. We also use a wide range of metrics from a broad list of data sources including the Science-Based Targets Initiative, Transition Pathway Initiative, CDP, MSCI, Trucost, Sustainalytics and, crucially, insights from our internal EOS team.

In addition to the exclusion of companies exposed to fossil fuels and high carbon intensity, the portfolio avoids companies exposed to unsustainable activities, such as:

  • Tobacco
  • The manufacture and distribution of controversial weapons and cluster munitions.
  • Gambling
  • Adult Entertainment
  • Breach of UN Global Compact Principles

The result is a diversified portfolio that has a significantly lower carbon footprint than the benchmark and is tilted towards companies with a good or improving ESG profile.

We assess macro risks and stress-test the portfolio, using MultiFRAME. We also perform a subjective ‘sense check’ at the company level to validate the data, assess unquantifiable factors and interrogate ESG before constructing the final portfolio.

Stewardship is an essential part of our investment approach. In managing the portfolio, we seek constructive and positive dialogues with each company’s board and management team, encouraging them to mitigate any negative impacts and to adopt practices, initiatives and strategies that deliver tangible and positive outcomes.


6123, 6224, 6232
Geir Lode

Geir Lode

Head of Global Equities, Federated Hermes Limited

Louise Dudley

Louise Dudley, CFA

Portfolio Manager, Global Equities, Federated Hermes Limited

Lewis Grant

Lewis Grant

Senior Portfolio Manager, Global Equities, Federated Hermes Limited

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Our Purpose

To deliver Sustainable Wealth Creation

Like all our investment capabilities, Federated Hermes Global Equity Low Carbon aims to deliver Sustainable Wealth Creation: the generation of wealth through investments that enrich investors, society and the environment over the long term.

Our business provides three equally powerful pathways to achieving this aim. Federated Hermes Global Equity Low Carbon features in the Sustainable route.

Active ESG on blue background

Responsible, active investing for long-term performance.

Sustainable on green background

Thematic and values-based approaches for sustainable outcomes.

Federated Hermes
Global Equity Low Carbon

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Mission-led investment strategies to create positive impact.