MASECO’s Approach to Low Carbon Centric (LCC) Investing

Written by Josh Hope Kibble

Introduction: The Role of Low Carbon Centric (LCC) Investing

At MASECO, we recognise that every investor has unique values and financial goals. While some focus solely on financial returns, others seek investment strategies that align with their environmental considerations.

For those clients, Low Carbon Centric (LCC) Investing is an investment approach that aims to reduce exposure to high-carbon companies while maintaining a disciplined, diversified portfolio. This allows investors to manage carbon-related risks while still focusing on long-term performance.

LCC investing provides exposure to companies actively reducing carbon intensity and managing environmental risks, while maintaining an evidence-based investment strategy.

Why Some Clients Consider LCC Investing

For investors who see carbon risk as a material factor, LCC investing provides a way to navigate the transition to a low-carbon economy while maintaining investment discipline. Here are some of the key reasons clients consider it:

Alignment with Personal Values – Many investors prefer portfolios that reflect their commitment to carbon-conscious business practices.
Risk Management – High-carbon companies face regulatory changes, carbon taxes, and evolving investor sentiment, which can impact long-term returns.
Opportunities in the Transition Economy – Companies investing in clean technology, renewable energy, and carbon efficiency are well-positioned for future growth.
Maintaining Diversification – LCC portfolios remain broadly diversified and do not rely on exclusions, ensuring exposure to a wide range of industries.

Defining LCC Investing

LCC Investing is a structured investment approach that tilts portfolios towards companies with lower carbon intensity, while maintaining a disciplined, financial-first strategy.

How LCC Investing Differs from Environmental, Social, & Governance (ESG) Investing

LCC investing is a specialised strategy within ESG investing that focuses primarily on carbon risk management rather than broad ethical considerations. Key differences include:

Carbon-Focused, Not General ESG – Prioritises carbon intensity and emissions data over broader environmental or social factors.
Risk-Based Approach – Seeks to reduce financial risks associated with carbon-intensive industries.
Selective Tilts, Not Blanket Exclusions – Rather than removing entire industries, LCC investing adjusts exposure within each sector to favour companies with better carbon management.

By taking this measured approach, LCC investing balances financial performance with carbon-conscious investment principles, ensuring investors retain broad market exposure.

MASECO’s Approach to LCC Investing

At MASECO, LCC investing is a structured, evidence, designed for clients who prioritise carbon-conscious investment principles. Our approach ensures that portfolios remain diversified and financially disciplined, while integrating carbon risk considerations.

How MASECO Measures Carbon Exposure

This is calculated using the following formula:

Carbon Intensity = Scope 1 and 2 Emissions (metric tonnes of CO₂) ÷ Revenue (in millions, relevant currency)

This allows us to compare how carbon-efficient one company is versus another. The lower the carbon intensity, the more efficiently a company is operating from an emissions standpoint.

To evaluate a portfolio, we take the asset-weighted average carbon intensity of all underlying holdings that report emissions. This gives us a snapshot of the portfolio’s overall carbon efficiency.

Scope 1 emissions are those released directly by a company through its operations, for example, from manufacturing or company-owned vehicles. Scope 2 emissions come from the energy a company purchases, such as electricity or heating. Together, these account for a major part of most companies’ carbon footprints.

By favouring companies with lower carbon intensity, our LCC portfolios are tilted towards more carbon efficient businesses. This helps reduce exposure to regulatory, reputational, and transition risks — all while maintaining diversification and a focus on long-term financial performance.

Portfolio Construction & Risk Management

Tilts towards lower-carbon companies while maintaining broad diversification.
Invests across different asset classes to avoid concentration risk.
Maintains a disciplined investment approach, ensuring risk-adjusted returns while managing carbon exposure.
Regular rebalancing to keep the portfolios in line with the desired strategy.

By integrating carbon-conscious tilts, rather than applying broad exclusions, LCC investing at MASECO remains a balanced, client-driven strategy.

Conclusion

LCC investing offers clients the opportunity to align their portfolios with carbon-conscious principles without compromising on performance. Our strategy is designed to capture long-term returns in a market increasingly influenced by sustainability, while managing exposure to high-carbon risks.

Rooted in our core investment philosophy, the approach emphasises broad diversification across asset classes and sectors. Rather than excluding entire industries, LCC portfolios tilt towards carbon-efficient companies, supporting risk management and long-term growth potential in a transitioning global economy.

At MASECO, LCC is an optional strategy for those who prioritise carbon risk management alongside financial discipline. It offers:

A structured, evidence-based investment process
Diversified exposure to maintain portfolio balance
Data-driven selection that lowers carbon intensity while capturing emerging opportunities

The Legal Stuff

This document is intended for the recipient only.
The information contained herein is subject to copyright with all rights reserved. The document may not be copied, forwarded or otherwise distributed, in whole or in part, to any other party without our written consent.
The views expressed in this article do not necessarily reflect the views of MASECO as a whole or any part thereof.
This document is provided for information purposes only and is not intended to be relied upon as a forecast, research or investment advice.
This document does not constitute a recommendation, offer or solicitation to buy or sell any products or to adopt an investment strategy.

Risk Warnings:

All investments involve risk and may lose value. The value of your investment can go down depending upon market conditions and you may not get back the original amount invested.
Your capital is always at risk.
Fluctuation in currency exchange rates may cause the value of an investment and/or a portfolio to go up or down.

Performance:

Past performance is not a reliable indicator of future results.
No assurance or guarantee can be given that any target return will be achieved.
Illustrations of potential risk or return are illustrative only and do not necessarily reflect possible actual maximum loss or gain.

This article does not take into account the specific goals or requirements of individuals and is not intended to be, nor should be construed as, investment or tax advice. You should carefully consider the suitability of any strategies along with your financial situation prior to making any decisions on an appropriate strategy. There may be limitations with respect to the readiness of LCC data in certain sectors, as well as limited availability of investments with relevant LCC characteristics in certain sectors. While MASECO views LCC considerations as having the potential to contribute to a portfolio’s long-term performance, there is no guarantee that such results will be achieved.

MASECO LLP (trading as MASECO Private Wealth and MASECO Institutional) is established as a limited liability partnership under the laws of England and Wales (Companies House No. OC337650) and has its registered office at The Kodak Building, 11 Keeley Street, London, WC2B 4BA.

MASECO LLP is authorised and regulated by the Financial Conduct Authority for the conduct of investment business in the UK and is registered with the US Securities and Exchange Commission as a Registered Investment Advisor.