Morgan Stanley IM: Mining for a Greener Future

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Given financial constraints in emerging markets, we believe mobilizing capital to climate solutions is key, but with emissions continuing to rise globally we are also looking at what decarbonization means in practice. We believe that corporates can play a more active role in driving decarbonization, especially where economic incentives already exist. For us, COP27 is a reminder that the real delta is about making progress, not lofty promises.

As investors, this suits us just fine. When it comes to evaluating our own portfolio’s carbon footprint, we focus on companies that have practical decarbonization pathways and will help drive real change in the emissions landscape over the next three to five years, in particular among our highest emitting companies. Overall, we believe that the “delta of change” is more meaningful than an absolute emissions target. We strive to identify companies that are moving in a positive direction and try to embed this in our investment approach and philosophy.

^{RISK CONSIDERATIONS
There is no assurance that a portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the portfolio will decline and that the value of portfolio shares may therefore be less than what you paid for them. Market values can change daily due to economic and other events (e.g. natural disasters, health crises, terrorism, conflicts and social unrest) that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects (e.g. portfolio liquidity) of events. Accordingly, you can lose money investing in this portfolio. Please be aware that this portfolio may be subject to certain additional risks. In general, equities securities’ values also fluctuate in response to activities specific to a company. Investments in foreign markets entail special risks such as currency, political, economic, market and liquidity risks. The risks of investing in emerging market countries are greater than the risks generally associated with investments in foreign developed countries. Stocks of small-capitalization companies entail special risks, such as limited product lines, markets, and financial resources, and greater market volatility than securities of larger, more-established companies. Derivative instruments can be illiquid, may disproportionately increase losses and may have a potentially large negative impact on the Portfolio’s performance. Illiquid securities may be more difficult to sell and value than public traded securities (liquidity risk). Non-diversified portfolios often invest in a more limited number of issuers. As such, changes in the financial condition or market value of a single issuer may cause greater volatility. Cryptocurrency (notably, Bitcoin) operates as a decentralized, peer-to-peer financial exchange and value storage that is used like money. It is not backed by any government. Federal, state or foreign governments may restrict the use and exchange of cryptocurrency. Cryptocurrency may experience very high volatility.}