Franklin Templeton Launches Fund Targeting Companies with Improving ESG Profiles

Global investment manager Franklin Templeton’s specialist investment manager ClearBridge Investments announced today the launch of the FTGF ClearBridge Global Sustainability Improvers Fund, a new global value equity fund investing in undervalued companies with improving ESG profiles.

According to Jaspal Sagger, Global Head of Product at Franklin Templeton, the new fund aims to enable investors with the ability in companies in the earlier stages of their sustainability journeys, with options targeting this theme much more limited than those targeting only companies with already-strong ESG profiles.

Sagger added:

“Our goal is to provide clients with investment solutions that satisfy a range of sustainability preferences, and our expanding sustainability improvers offering complements our best-in-class and impact funds in providing that breadth of choice.”

The new fund will invest in a concentrated portfolio of approximately 30-40 equity securities, and aims to provide long-term capital appreciation by focusing on undervalued companies improving their ESG practices.

Each portfolio holding will have an ESG improvement thesis at purchase, alongside sustainability targets that will be monitored and measured for improvement. The firm said that companies that fail to demonstrate expected improvements against the targets will be removed from the portfolio.

Categorized as Article 8 under the EU’s SFDR regulation, the fund will initially be available for distribution in the UK, Ireland, Italy and Spain. The strategy will be managed by Grace Su and Jean Yu, portfolio managers on ClearBridge’s Global Value Equity investment team.

Su said:

“We look for companies that are committed to improving their sustainability profiles over time, and that means looking at sectors that are often overlooked by traditional ESG strategies. Companies that address material ESG weaknesses reduce their operating risk, which can be a catalyst for unlocking shareholder value.”

Yu added:

“Investors have sought the comfort of sustainability in a narrow range of companies that are already displaying good ESG ratings. We believe one needs to look more broadly, and for investors wanting to participate in the transition towards a more sustainable economy, while retaining the potential for excess returns, this is a compelling strategy.”