As an independent, private partnership, Wellington Management focuses on long-term results, sustainable business practices, and aligning our interests with those of our clients. Two examples of Wellington’s long-termism are our 40-year Future Themes research tradition and our ongoing commitment to climate research.
Structural research envisions tomorrow’s world today
Every six to eight years, we challenge investors via Future Themes to step back from the daily focus on markets and think about structural trends reshaping markets and economies for the next five to 10 years. Future Themes stimulates internal debate and collaborative critical thinking about nascent ideas that could have material, long-term implications for our clients. This past year, we crowdsourced Future Themes and received more than 650 ideas from partners and employees around the world. Using data analytics, we identified patterns and commonalities to create a taxonomy that made it easier to decide where to focus. More than 100 of the submitted ideas related to the environment and climate change.
Using climate science to enhance financial analysis
We have long believed climate change will affect economic and market outcomes. Climate research has been part of Future Themes since 2004, and we have offered climate-focused investment approaches since 2007. In 2018, we began a collaboration with Woodwell Climate Research Center to bridge the gap between climate science and finance. Together, we study heat, drought, water scarcity, and other physical climate perils. We integrate climate-science projections with investment analyses to create geospatial maps, dashboards, and other tools our investors can use to assess climate risks to their capital-market exposures.
Driving capital toward climate change solutions
This work also enables us to uncover future market needs and investment opportunities. For example, while researching water scarcity and climate migration as part of Future Themes, our cross-functional teams identified innovations like water-capture technology, precision irrigation, and desalination — should they reach scale — as attractive investment ideas that could benefit our clients over time and help channel capital toward solutions. As more climate migrants seek temperate places to live, investment opportunities related to urban infrastructure and affordable housing may arise, while sovereign bonds in equatorial regions could see downside pressure. Our climate research has revealed the enormous need to invest in climate resiliency and the gross undercapitalization of adaptation solutions. We believe we can add value by providing capital to companies developing climate solutions and potentially deliver attractive risk-adjusted returns for clients over time.
Long-term thinking is integral to the fiduciary mindset at Wellington. To us, investing in ideas that align with a sustainable future is more than a thematic exercise. It is a path toward long-term value creation and helping our clients reach their investment objectives.
Learn more about Future Themes in this recent episode of FCLTGlobal’s Going Long podcast, featuring an interview with Wellington’s Head of Investment Research, Mary Pryshlak.