“...it’s crazy that our banks and our pensions are investing in fossil fuels, when these are the very things that are jeopardising the future that we’re saving for”
Sir David Attenborough, 2020, A Life On Our Planet
Tackling Climate Change
The science showing how extreme weather events can be attributed to human-induced global warming is developing rapidly. On average, global warming is currently increasing at a rate of about 0.2 °C per decade from today’s level of approximately 1 °C, and may be accelerating. This is the amount the earth’s climate has already warmed above pre-industrial levels. If we follow the current emissions’ trajectory, the 1.5 °C threshold could be exceeded between the years 2030 and 2050.
The UN Framework Convention on Climate Change’s (UNFCCC) Paris Agreement acknowledges that even if global temperatures are stabilised below the 1.5 °C target and well below 2.0 °C above pre-industrial levels, the impacts will continue to be felt, such as more frequent extreme weather events (UN FCCC 2015).
The Funds Signed Up
" The central tenet of our Global Sustainable Equity Strategy is that the world must meet sustainability challenges with radical solutions. The NZC10 will help frame the way asset managers invest and their engagement activities relating to carbon emissions. It will also provide a tangible way for investors to assess which funds genuinely have a positive impact on carbon emissions, and which are simply “greenwashing”.
Our fund already goes beyond the base requirements set out. For every company we examine, we analyse the net carbon impact across Scope 1, 2 and 3 emissions, considering the impact of the whole value chain and not just direct emissions."
"Since its 1991 launch, low carbon investing has been a central aspect of the Janus Henderson Global Sustainable Equity fund’s philosophy. Janus Henderson ESG analyst Ama Seery said: ‘The fund already meets the NZC10 standard, which sets ambitious yet achievable targets for carbon reduction to help prevent the disastrous and irreversible consequences of climate change."
‘A key outcome has been the impact it has had on our engagement, galvanising our discussions with companies that have started a low carbon journey, but have no targets to achieve neutrality by 2030. This engagement has been positively received; strengthening our relationship and dialogue with the companies we invest in.’
‘Climate science is saying we need to make bigger and faster CO2 emissions reductions than most people think,’ said Liontrust investment manager Mike Appleby.
‘This NZC10 initiative is a great challenge to investors and the companies they hold to concentrate on what this urgency means for their business over the next decade.
‘The Liontrust Sustainable Future Corporate Bond fund is already skewed away from carbon-intensive businesses making it easier for these companies to approach carbon neutrality. But even the most progressive businesses still need to scale up their ambition to achieve net zero carbon in the next decade. We will continue to challenge them to do so.’
The Montanaro Better World fund has a global small cap focus and with smaller companies typically lagging on setting and reporting non-financial targets, this makes them ripe for impact, the firm believes.
‘Just 44% of our companies currently report Scope 1 and 2 emissions and very few have net zero carbon strategies in place,’ said Montanaro sustainable and impact investing specialist Ed Heaven.
‘We engage with our investee companies to deliver impact. As long-term shareholders, our voice tends to be listened to. We are working with all of our companies to encourage them to set, and meet, net zero carbon targets within a reasonable timeframe.’
WHEB Head of listed equity research and partner Seb Beloe said it is now abundantly clear that the global economy is on an unsustainable trajectory, with new reports, seemingly every week, documenting the staggering impact that humans are having on the planet.
‘The WHEB Sustainability fund only invests in companies that supply solutions to these pressing challenges. The NZC10 target is a demanding test of the extent to which fund managers are serious in their efforts to tackle climate change,’ he said.
‘We are pleased that WHEB’s fund passes this challenge. However, much, much more is necessary, and we will be pushing the climate agenda more assertively with investee companies over the coming months.’
The Net-Zero Carbon Target has featured in
