As global corporations transition toward a net-zero economy, a team of veteran equity managers has launched a new investment firm aiming to benefit from the shift to a low-carbon economy.

London-based Resolution Investors was founded on the thesis that decarbonization will be a defining economic driver, making it a significant, and largely untapped, alpha opportunity. The firm’s flagship strategy, an active core global equity fund, holds a concentrated portfolio of 30 to 40 high-quality companies that are either leaders in or enablers of the climate transition.

“We look at what companies are doing both offensively and defensively on the climate transition and how that fits into a quality framework to deliver superior risk-adjusted returns,” said Resolution’s portfolio manager David Lowish.

The firm’s approach is intensely fundamental. “We’re not thematic investors,” said Rob Brown, head of climate research. “Every company we look at stands on its own as a fundamental source of earnings. Quality is the lens we use to view that analysis.”

This leads to a highly selective investable universe. Co-portfolio manager Akhil Monappa illustrated this point with the solar sector. “We are having a tough time finding companies that meet our criteria in the solar space for profitability reasons,” he said, noting that many lack good unit economics.

Conversely, the firm is willing to invest in large-cap growth stocks if their climate work is substantial. “Megacaps might be doing well but not exactly authentic; meanwhile the green tech companies might be authentic but not exactly quality,” Monappa added. “Our focus is that they’re all fundamentally good quality companies.”

The firm’s current investment case highlights this balance. Lowish named Wabtec as an “old economy” industrial poised to benefit from rail’s carbon efficiency. He also pointed to Microsoft as a decarbonizing megacap.

Lowish stressed Resolution’s focus is on corporate data over political headlines. “We think irrespective of who’s in charge in the White House, the good companies, your Microsofts, your Wabtecs, are thinking about how to decarbonize,” he said.

Despite political saber-rattling and regulatory pushback, the partners firmly believe the energy transition is a deep-seated global trend. Brown pointed to aggressive development in China and Europe as evidence. He also confirmed that, based on conversations at recent climate conferences, asset owners are largely increasing, not decreasing, their commitments.

“It is not lost on us that the No. 2 state for producing solar is not NY, it’s Texas,” Brown added, arguing that the idea the net-zero transition “is all being put on hold... is just misguided."