To news & knowledge overview

Infrastructure: generating return by taking 9 million cars off the roads

20 October 2022

With ESG a key part of our investment process, we aim to invest in companies that make a difference. This helps us to generate a sustainable investment return for our clients and in doing so create a better world.

I’d like to illustrate this by sharing the following example.

Focus on the future
Our infrastructure strategy invests in companies that operate in three main areas: utilities, transport and communications. Utilities obviously play a major role in the energy transition (and now also in energy security and independence after this year’s geopolitical turbulence). Appropriate capital allocation by utilities could lead to a considerable reduction in carbon emissions.

While many asset managers are now focusing on ESG issues, we believe we stand out from the crowd in the way we look into the future and recognise the sustainability journey. We examine the company’s ambitions and the steps it’s taking rather than opting for a short-term focus on the present situation. This is essential to generating a long-term sustainable financial return in our view.

A good example of this approach is Xcel Energy. According to the EU taxonomy definitions, this US utility company wouldn’t currently be considered as a sustainable investment because some of its energy is generated from fossil fuels. Yet we’ve decided not to exclude this investment as we believe the present emission profile doesn’t reflect the company’s ambitions and goals.

This is because Xcel Energy has already shown itself capable of drastically reducing its emissions, on top of which the company has a clear roadmap detailing its plans for further reductions in future. You’re probably wondering why this isn’t happening more quickly. The company draws up its plans in consultation with the regulator and the affordability of the transition weighs heavily here (the Social in ESG). So it’s important that these firms spread out the increases over several years to limit the impact, especially on their most vulnerable customers.

Let’s examine that impact. Xcel Energy will emit 40 million fewer tons of carbon in 2030. It’s hard to fathom a number like that but we can translate it into car emissions. The same impact would be achieved by taking nearly 9 million cars off the road – for good. And coincidentally that’s the number of cars in the Netherlands!

In short, a realistic approach is not just important, we believe it makes all the difference. Companies need to be given time to implement changes and move towards a sustainable future because this kind of transformation doesn’t happen overnight. This not only paves the way for a sustainable world but will also generate positive share price returns.

About Van Lanschot Kempen
Van Lanschot Kempen, a wealth manager active in Private Banking, Professional Solutions, Investment Management and Investment Banking, with the aim of preserving and creating wealth, in a sustainable way, for both its clients and the society of which it is part. As a sustainable wealth manager with a long-term focus, Van Lanschot Kempen proactively seeks to prevent negative impact for all stakeholders and to create positive long-term financial and non-financial value. Listed at Euronext Amsterdam, Van Lanschot Kempen is the Netherlands’ oldest independent financial services company, with a history dating back to 1737. To fully leverage the potential of the Van Lanschot Kempen organisation for its clients, it provides solutions that build on the knowledge and expertise across its entire group and on its open architecture platform. Van Lanschot Kempen is convinced that it is able to meet the needs of its clients in a sustainable way by offering them access to the full range of its products and services across all its businesses.

About Kempen Capital Management

Kempen Capital Management is a specialist investment manager with a focused approach and a clear investment philosophy. We believe in long-term stewardship for our clients and other stakeholders. Kempen provides sustainable returns, fiduciary management services, manager selection, portfolio construction and monitoring, alongside a number of actively-managed investment strategies. As of 30 June 2022, Kempen Capital Management had a total of €77.5 billion in client assets under management.

Kempen Capital Management, part of Van Lanschot Kempen, is a specialist and independent wealth manager. Kempen Capital Management NV is licensed as a manager of various UCITS and AIFs and authorised to provide investment services and as such is subject to supervision by the Netherlands Authority for the Financial Markets. Kempen Capital Management (UK) Ltd is licensed as a manager and subject to supervision by the Financial Conduct Authority.


Please leave your email and we will send you our latest updates