KraneShares recently sat down with Rockefeller Asset Management, the Ocean Foundation, and Loblaw to discuss engagement, sustainability practices, investor benefits, and more in a webinar. Loblaw is one of the top 10 holdings within the KraneShares Rockefeller Ocean Engagement ETF (KSEA) and a driver of significant change in retail plastic use.
KSEA seeks to invest in companies that have significant impacts on oceans and ocean resources, known as the “blue economy.” Investing in these companies allows Rockefeller Asset Management, the fund’s subadvisor, to deploy its engagement practices.
Engagement at the Core of Rockefeller’s ESG Process
Rockefeller Asset Management brings more than 30 years of ESG investing experience to the table. Additionally, the firm holds more than a decade of experience investing in the ocean economic system, and partners with The Ocean Foundation.
“We want to help companies improve competitive positioning, reduce reputational risks, get ahead of regulatory risks, improve ESG ratings and rankings, and also reduce environmental impact and improve social outcomes,” explained Emily Claire Mackey Faubel, ESG Engagement Analyst at Rockefeller Asset Management.
The engagement team at Rockefeller Asset Management works with PMs as well as fundamental equity analysts. The team engages with companies, both through constructive communication as well as proxy voting.
Rockefeller takes this process one step further to also engage with regulators, lawmakers, and non-governmental organizations related to the blue economy. This focus includes pollution prevention, ocean conservation, coastal development, and more.
“Where we really see our niche is identifying those companies that are ESG improvers today, but we feel through engagement and interaction with our team can be the leaders and solutions of tomorrow,” Mackey Faubel said.
Rockefeller partners with the Ocean Foundation to identify issues central to oceans and then engage with companies within the portfolio to work to solve these issues. The fund’s strategy entails determining risks to reduce and eliminate as well as seeking opportunities to leverage according to Mackey Faubel.
Loblaw Leading the Charge on Retail Plastic Reductions
An exemplary case of what KSEA’s strategy entails is that of Loblaw, Canada’s largest retailer private sector employer. The company is the food and pharmacy leader in Canada with over 2500 locations. With its focus on stewardship and ESG, Loblaw looks for opportunities where it can apply maximum impact.
“Fighting plastic waste is one of the most important challenges that a company like ours is uniquely well positioned to take on,” noted Sandy Kesseler, VP, of ESG Integration and Reporting at Loblaw. Loblaw works to incorporate more reusable materials and recycled content in its daily business.
It also has a growing influence on the recycling industry and partners with the Consumer Goods Forum, Global Plastic Waste Coalition of Action, Canada Plastic Pacts, and more to drive change as an industry. “We believe that through these collective actions, it’s not one company — it’s not just Loblaw — we can significantly reduce the plastic waste and improve our environment,” Kesseler declared.
Loblaw aims to have only reusable or recycled packaging on all of its stores’ shelves by 2026. Approximately one-third of plastic packaging waste is generated by retailers according to Emma Race, Senior Director, Sustainability and Social Impact at Loblaw. Given Loblaw’s industry position, the potential knock-on effect for industry-wide change is significant.
KSEA Invests for Change While Capturing Strong Return Potential
Loblaw is just one of approximately 50 companies that make up KSEA.
“Back in 2007, the Ocean Foundation made a strategic decision to pursue an investment fund,” explained Katie Thompson, Program Manager, of the Ocean Foundation. “We were guided by the belief that addressing ocean threats could yield return surpassing other industry benchmarks.”
KSEA invests in commercial fishing, waste management, aquaculture, renewable energy, and other industries. The strategy focuses primarily on companies dubbed “ocean improvers.” These companies offer the most significant potential positive impacts for sustainability via engagement. The fund also invests in companies categorized as “ocean leaders” and “ocean solutions.”
The strategy avoids companies that endanger ocean health, such as deep-sea mining companies or offshore oil.
KSEA has a management fee of 0.86%.
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