Spotlight on Mike Harut, Responsible Investment Manager, Munro Partners
Global Thought Leader Spotlight
Mike Harut, Responsible Investment Manager, Munro Partners
“As the Responsible Investment Manager at Munro Partners, my job is ensuring that ESG issues are appropriately integrated into our company valuation and stock selection process. We do this through a proprietary ESG analysis, which feeds quantitively into our valuation models.
“This bottom-up ESG analysis also drives our stewardship efforts, including our engagement with companies on gaps we identify.
“Separately, Munro has a long history of investing in climate change opportunities. We invest in this theme in all our funds and exclusively in our Climate Change Leaders strategy. My role is to help Munro understand how the decarbonisation of the global economy will unfold and identify the companies which stand to benefit from the transition.
“Within the climate change theme, the three key developments in our minds are the US Inflation Reduction Act (IRA), nuclear energy and the role of China.
“The US has come a long way since former President Trump sought to pull the US out of the Paris Agreement. In mid-2022, many were surprised by the passage of the IRA, which offers 10 plus years of policy certainty and likely over $400 billion to incentivise the transition. This legislation, which is unlikely to be repealed even under a different administration, is a game changer that is already driving major announcements across renewables, EV batteries, green hydrogen and many other areas.
“We also note the IRA’s support of the existing nuclear energy fleet in the US. Nuclear energy is over 18% of the electricity generation mix today. In recognition of it being carbon free baseload power, the IRA effectively provides a price floor for energy generated using nuclear.
“The IRA is also driving others, notably the EU, to respond in kind to avoid a capital flight to the US and be able to achieve their own decarbonisation goals.
“Related to this is the relationship between the US and China. There are clearly many elements here, but an important ESG component is China’s treatment of the Uyghurs in Xinjiang and the US response. Last year, the Uyghur Forced Labor Prevention Act (UFLPA) went into force, meaning that imports from the Xinjiang region are presumed to have been made with forced labour unless proven otherwise. Given China’s dominance in the solar supply chain, this has required US solar developers to react – with mixed success – to ensure they have materials free from forced labour.
“The headline implication for investors is that the US is increasingly attractive for those wanting to gain exposure to decarbonisation enablers. This includes companies like NextEra Energy, the world’s largest solar and wind developer, electric vehicle maker Tesla, and battery manufacturer Samsung SDI.
“With respect to nuclear energy, beyond the IRA support, carbon free baseload power becomes increasingly important as intermittent renewables grow as part of the mix. So, companies like Constellation Energy, which operates the largest nuclear fleet in the US, stand to benefit.
“Of course, there are material ESG risks here, including nuclear safety and handling nuclear waste. So, as we have done, investors need to engage with companies on these critical issues.
“Finally, investors need to understand supply chain risks, especially in China, and engage with companies on their human rights due diligence. While this is a risk for many companies, there are others that benefit, such as First Solar, a US solar module manufacturer which does not rely on crystalline silicon, a key input to other modules that’s dominated by Chinese suppliers.”
Mike will be presenting on how institutional investors ought to seek to achieve carbon footprint reduction targets by managing climate change risk and capturing opportunities within the equities asset class at Global Investment Institute’s upcoming Net Zero Investment Forum, taking place on Tuesday, 28 March 2023 at the Grand Hyatt Melbourne, Victoria.
To register your interest in attending, click here or for more information email zlatan.kapetanovic@globalii.com.au.
Mike Harut, Responsible Investment Manager, Munro Partners
Mike is a Responsible Investment Manager at Munro Partners, leading the development and integration of responsible investment and ESG practices into investment decision-making.
Mike has over 10 years of experience in responsible investment and ESG. He previously worked at the Australian Council of Superannuation Investors (ACSI), which represents 26 Australian and international asset owners with over A$1 trillion in funds under management. There he led engagement on a range of ESG issues with ASX listed companies, as well as providing voting advice and undertaking research. Before that, Mike was a Senior ESG Analyst at the Future Fund, Australia’s sovereign wealth fund which manages over A$200b.
Mike is also a lecturer at the University of Melbourne, co-lecturing a new subject called Sustainable Investment for finance master’s students. He has degrees with Honours in Commerce and Law from the University of Melbourne and is a Chartered Financial Analyst.
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