Interview with Nicolas Jacob, Fund manager of the ODDO BHF Green Planet fund, April 2022

Why do you consider the ecological transition to be a necessity?

NJ: The commitments made when the Paris Agreement was proclaimed in 2015 and then renewed at COP 26 in Glasgow last November place the world, if they are kept on schedule, on a warming trajectory of 2.1 to 2.4°C, i.e. still well above the 1.5 to 2°C target. Faced with the foreseeable consequences of climate change, from the scarcity of resources to the accelerated loss of biodiversity, which has a direct impact on our health, it is essential to make a global ecological transition towards a sustainable development model that renews our ways of producing, consuming and even moving around. I would add that the current geopolitical context, in which energy independence is at the heart of concerns, can only accelerate this awareness even more, in particular the imperative to move away from fossil fuels within a reasonable timeframe.

Why is this an investment opportunity for an investor?

NJ: According to the International Energy Agency, this global transformation will require between 4,000 and 5,000 billion dollars in annual investments between now and 2030 if we are to achieve the objective of carbon neutrality by 2050. Beyond these massive amounts of investment, the ecological transition encompasses a number of sectors with strong growth potential. It offers investors the possibility of being positioned in buoyant themes such as clean energy (+8% annual growth expected between 2018 and 2025*), energy efficiency (+6%*), sustainable mobility (+32%*), and the preservation of natural resources (+10%*).

*Sources: BofA Global Research 2020, ODDO BHF AM SAS

Many quality companies with high growth profiles, in our opinion, are involved in this theme. I am thinking in particular of names such as SSE** - a British energy production and distribution company completing its transformation from fossil fuels to renewables, Darling Ingredients** - a US company specialising in food waste recycling - and Quanta Services ** - a US company specialising in the design, manufacture and maintenance of electrical networks.

How is ODDO BHF Asset Management contributing to this positive revolution?

NJ: As a committed player, we are convinced that the investment world must actively contribute to the ecological transition. With this in mind, we have designed ODDO BHF Green Planet. This equity fund which is now classified as article 9 SFDR and has received several labels in Europe (SRI label, FNG label) offers investors comprehensive exposure to this theme, selecting 30 to 60 companies of all sizes, in all sectors, on a global scale. We aim to select companies with major competitive advantages, based on our analysis. In addition, we strive to select the most promising and best performing companies based on environmental commitment criteria. To show the relevance of this approach, we publish the green share. This indicator measures the percentage of the portfolio exposed to companies offering clean technology solutions is 78% at the end of March 2022. We also measure that we invest in companies which contribute to some of the different Sustainable Development Goals. E.g. our portfolio contributes positively to the SDG12 to achieve sustainable and rational management of natural resources, or to reduce waste generation through recycling. ODDO BHF Green Planet remains exposed to equity risk and capital loss.

How is ODDO BHF Green Planet managed on a daily basis?

NJ: Our uniqueness lies in an investment process based on Artificial Intelligence. The use of natural language processing algorithms aims to detect the most alpha-generating sub-themes related to the ecological transition throughout its value chain. However, human intervention remains essential within ODDO BHF Green Planet to structure the algorithms, to provide a vision of the theme, to identify the companies that we believe have the best fundamental characteristics in terms of growth, quality, valuation and stock market dynamics, and finally to favour our strongest convictions within the portfolio.

** These examples do not constitute investment recommendations