“Over half of global GDP directly relies on natural capital… while we are not integrating natural capital challenges into investment decision-making, nor do we have suitable global policies to effectively address these, breaching the planetary boundaries.”
— Alina Donets
Alina Donets is the lead portfolio manager of LO Funds-Natural Capital at Lombard Odier Investment Managers and has been managing sustainability portfolios for nearly nine years. She is a globally recognized specialist in water and sustainable investment, and during her career has developed several new strategies with proprietary impact, thematic, and ESG-centered processes. In this episode we will be doing a deep dive on biodiversity and investing in natural capital.
The LO Funds-Natural Capital invests in publicly traded companies that contribute to the preservation of natural capital or create solutions for the circular biodiversity economy. Alina launched the fund in 2020 and the fund has over 900 million dollars in assets under management.
Alina cut her teeth in sustainable investing at Pictet Asset Management where she was an investment manager on the Pictet Water fund and was a supporting investment manager on the Pictet Global Environmental Opportunities fund. Following that she co-managed the Allianz Global Water strategy at Allianz Global Investors where she developed the proprietary SDG-alignment tool that became the foundation for their sustainable SDG-aligned investment fund range.
Alina holds a Bachelor of Science degree in Business Studies from the Bayes Business School at City, University of London (formerly the Cass Business School) and a Master of International Business degree from the HEC Paris. Alina is a CFA® charterholder and has achieved the CFA Institute Certificate in ESG Investing.
Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Castbox, Google Podcasts, Stitcher, Amazon Music, or on your favorite podcast platform. You can watch the interview on YouTube here.
What was your favorite quote or lesson from this episode? Please let me know in the comments.
SCROLL BELOW FOR LINKS AND SHOW NOTES…
SELECTED LINKS FROM THIS EPISODE:
- Connect with Alina Donets: LinkedIN
- Lombard Odier Asset Management
- LO Funds-Natural Capital
- Allianz Global Investors
- Allianz Global Water Fund
- Pictet Asset Management
- Pictet Water Fund Fact Sheet
- Advanced Drainage Systems
SHOW NOTES:
- [02:56] Alina describes her upbringing in what is present day Czech Republic and how she takes after her entrepreneurial father. Born in the Ukrainian Soviet Socialist Republic (present day Ukraine), she talks about how her entire world transformed before her eyes during her formative years. She discusses her education in Czech Republic, London and Paris and early career.
- [13:58] Alina recounts how Allianz Global Investors had been developing its approach to sustainable investing when she joined the firm in September 2017. She talks about the resistance she had to overcome as a strong proponent of impact investing and public equity.
- [16:31] Alina speaks on the objectives of Lombard Odier and the scope of their investments. She defines “natural capital” and explains the two key reasons to consider investing in these resources. She talks about the framework called “planetary boundaries” used to inform these investments.
- [22:57] Alina discusses Lombard Odier’s approach to constructing a “high-conviction” portfolio of 40 to 50 companies in the LO Funds-Natural Capital, and their reference benchmark.
- [27:00] Alina explains how Lombard Odier invests in initiatives that turn Wasteful, Idle, Lopsided, and Dirty (WILD) economies into Circular, Lean, Inclusive and Clean (CLIC®) economies.
- [33:19] Alina shares the four key areas for investment that Lombard Odier adheres to, and how they then identify the business activities that allow the fund to achieve their objectives.
- [46:01] The fund deals with its own unique set of risks. Alina lists the financial and regulatory considerations Lombard Odier must navigate.
- [48:22] Accusations of “greenwashing” are always an issue that sustainable investors have to contend with. Alina gives her thoughts on funds offering greater transparency and the advantages of increased regulation in managing this reality.
- [51:51] Alina names the biggest challenge in the SRI public equity space today, and what she knows about the space now that she wishes she knew when she first entered it.
MORE ALINA DONETS QUOTES FROM THE INTERVIEW:
“Over half of the global GDP directly relies on natural capital . . . meanwhile we are not integrating natural capital challenges into investment decision-making, nor do we have suitable global policies to effectively address these, breaching the planetary boundaries.”
— Alina Donets
“Planetary boundaries” allows you to monitor and assess where we stand in terms of utilization or footprint on some of these natural resources relative to what is a sustainable manner of utilizing these resources.”
— Alina Donets
“We’re benchmark-agnostic; but, of course, our conviction is that investing in companies that create solutions to natural capital is better financially.”
— Alina Donets
“We believe that capital allocation and active engagement eventually helps to increase exposure to the right business activities.”
— Alina Donets
“When we talk about natural capital, it’s basically all the resources that we get from nature, starting from non-renewables such as minerals which we extract and transform and utilize in our society, to renewable and regenerative sources either as direct input (water) or as a service (bees that pollinate agricultural fields).”
— Alina Donets
