19 Aug 2022
Our CEO Anne Richards explains why the next step in the response to the climate emergency will be the hardest. Turning pledges and commitments into real action requires effort; however, it is essential now that the scale of the problem is better understood, and the solutions made clearer.
Key points
Read the full Sustainable Investing Report 2022 here.
We believe the mission to tackle climate change remains as important as ever.
We might well wish for a more stable geopolitical and macroeconomic backdrop for what is a substantial task. But we can’t afford to let the urgent distract from the existential and wait for conditions to improve.
With that in mind, and to sharpen our analysis of the progress made by our investee companies, we have enhanced our proprietary sustainability ratings to include assessments of both the financial, and non-financial impacts, of company actions. This is what is known as ‘double materiality’ and it is crucial to compiling a forward-looking view on the sustainability profiles of corporate issuers.
Asset managers have a choice to engage or divest, or a combination of both. As active managers, we have preferred to engage with companies where their transition plans fall short. Getting from brown to green is the priority, not just in portfolios but in aggregate across the world. To that end we are employing a climate rating to identify the companies with whom we should prioritise engagement to meet our net-zero goals.
By working with other investors in this area, through groups such as Climate Action 100+, we can share knowledge and investment policies, engaging directly with management to focus improvements on areas that need it most.
Finally, sustainable investing is as important to private markets as public ones. Private markets give investors access to those smaller-scale firms working on green technology to reshape industries, as well as renewable energy projects.
Sustainability is complex and, like most areas of finance, constantly evolving. It requires us to iterate our own processes to keep pace with change and ensure our investment ambitions remain high.
Read the full Sustainable Investing Report 2022 here.
Important information
This information is for investment professionals only and should not be relied upon by private investors. Past performance is not a reliable indicator of future returns. Investors should note that the views expressed may no longer be current and may have already been acted upon. Changes in currency exchange rates may affect the value of an investment in overseas markets. A focus on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that at times compares unfavourably to similar products without such focus. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security’s ESG credentials can change over time. Reference in this document to specific securities should not be interpreted as a recommendation to buy or sell these securities and is only included for illustration purposes.