One of the highest-ranked money managers in the world of ethical investing never expected to work in finance.
Philip Ripman, a 39-year-old Scottish Norwegian who studied Chinese and political philosophy, says he’s grateful to his employer -- Storebrand Asset Management -- for giving an outsider a chance.
“It’s not a common thing to have someone with my background come through the sustainability ranks and be able to take over a fund,” Ripman said in an interview in Oslo.
Storebrand Global Solutions was among the equity funds singled out last month for doing particularly well in the annual Climetrics Fund Awards. Climetrics ranks 17,000 funds on how the companies they invest in tackle greenhouse-gas emissions, water-management and deforestation. Of the 10 top-rated European and global climate funds, the Storebrand offering that Ripman manages delivered the best five-year return, with an annual gain of 11.2%, according to data compiled by Bloomberg.
Ripman is part of a new class of portfolio managers that’s feeding a growing investor population desperate for cleaner returns. The Net-Zero Asset Owner Alliance, which represents nearly $4 trillion held by pension funds and other institutional investors, is eager to find managers who can deliver the environmental, social and governance standards they’re looking for.
“Traditionally, ESG ratings have started at the wrong point,” Ripman said. He says ratings should be based on the products and services that a company creates, rather than on its processes and reporting. British American Tobacco Plc, for example, tends to do well in ESG ratings because the company uses sustainable farming techniques and upholds good reporting standards. But its ethical credentials are questionable, given that smoking kills.
“What we try to focus on is what companies actually do,” he said. So far in 2020, Ripman has eked out a 1.4% return, which is far better than the 15% slump of the U.S. benchmark Standard & Poor’s 500 Index as of March 9. The portfolio manager notes that he’s shunned airline stocks and companies linked to the leisure industry as part of his strategy.
Ripman breaks his investment process down into layers: First it’s about finding companies that, through their products and services, live up to the United Nation’s Sustainable Development Goals. The goal is to make the planet a better place to live by 2030, by focusing on parameters like ending extreme poverty and bringing about equality for women. Finding companies that fit into that framework is “the overarching goal,” Ripman said.
Among Ripman’s biggest investments are Nvidia Corp., a Santa Clara, California-based company that generates most of its revenue from selling graphics processing units, and Bharti Airtel Ltd., an Indian telecommunications firm. He says the size of a holding depends on the size of the company, with all large caps in his fund representing about 2%.
The fund also holds more traditional green stocks such as Vestas Wind Systems A/S and Siemens Gamesa Renewable Energy SA.