We launched our first sustainable investment fund in 2005. At that time we were convinced all companies would need to adjust to operating in an increasingly carbon-constrained world, and more companies would need to develop solutions to make economies less carbon intensive. Our conviction has never waned, nor has the urgency of the carbon-reduction challenge.
An imperfect indication of how seriously we take decarbonisation is that the carbon footprint of each of our investment strategies has consistently been at least 80% below its respective benchmark index.*
We invest only in high-quality companies contributing to a more sustainable future. This leads us to seek out companies with exceptional cultures, run by responsible stewards, and whose products, services and operations help reduce ecological footprints, or advance human development, or both, wherever possible.
Some companies we invest in are delivering, or directly enabling, the emission reductions needed to help meet global 1.5oC warming targets. Obvious examples include renewable energy companies. Less obvious examples include companies operating further up or down the energy supply chain, and companies facilitating energy efficiency, waste reduction and recycling. But even companies supporting other aspects of sustainable development, such as improved health or reduced inequality, need to reduce business-as-usual carbon emissions in their supply chains and operations.
The chart above shows our equity share of scope 1 and 2 emissions for each investee company, aggregated across all of our strategies for each of the past 5 years. The benchmark comparisons use the same approach by assuming benchmarks hold the same total value of investments as the comparative strategy.
*Source: Carbon metrics stated are sourced from Stewart Investors and MSCI as at 31 December 2021.
We engage constructively as owners to encourage companies to do more and move faster to achieve sustainable development outcomes, including transitioning to a lower-carbon world. Our investment approach is bottom-up. We spend time understanding each company and its place in the economy from the ground up. We pick apart the fundamental attributes of each business. We do our best to understand the attitudes of the people who steward each company.
We also seek to understand how rising to the challenge of a carbon-constrained future might influence the quality of a company, and how each company can help the world achieve its carbon-reduction targets.
A risk with distant targets is that we never arrive at our destination. Our Climate Report sets out a clear baseline and targets for 2025 and 2030. We also aim to invest in companies achieving positive social outcomes and contributing to far-reaching sustainable development challenges such as poverty alleviation, inequality and biodiversity loss. Our carbon targets do not diminish our focus on these other areas, if anything we see them as being deeply and intrinsically connected.
We will continue to critically assess the merits of our investment approach and the goals we set ourselves for helping achieve a lower-carbon, sustainable economy.
Allocate capital to high quality companies developing and implementing solutions to alleviate climate change and biodiversity loss, while not investing in fossil fuel companies1.
Provide full transparency of our investments, and map these on our Portfolio Explorer tool to frameworks such as Project Drawdown2 climate change solutions to both illustrate how companies are contributing to emission reductions and to help inform and focus our engagement efforts.
Encourage companies to take positive actions and use their influence across their value chains to drive emission reductions, while also striving to ensure equitable treatment of all their stakeholders in the transition to a carbon-constrained economy3.
Reduce emissions in our own operations and offset whatever emissions we cannot remove.
A Climate Statement Q&A is also available below alongside this statement and our Climate Report contains further detail on our thinking, reporting and commitments.
Climate change statement Q&A
What are your governance and oversight arrangements for climate change, including for remuneration?
Are you committing to net-zero emissions by 2050 and signing the Net Zero Asset Managers Initiative?
How does your net-zero target relate to other sustainability issues?
Do you have an action plan?
What do you mean by commissioning and sharing research?
Are you involved with recognised industry climate change initiatives?
Will you invest in fossil fuel companies which are transitioning?
Do you support and comply with the Task Force for Climate Related Financial Disclosure (TCFD)?
Is your engagement and voting strategy aligned with your climate change commitment?
Will you be using carbon offsets?
What are the key climate-related risks in the team's portfolios?
How do you identify these risks?
How do you manage these risks?
What targets and objectives have you set?
View our list of investment terms to help you understand the terminology within this document.
- Consistent with our position statement on harmful and controversial products and services.
- This includes voting for company and shareholder proposals that in our judgement are likely to promote sustainable development and responsible business practices.
- The Net Zero Asset Managers initiative is an international group of asset managers committed to supporting net-zero goals. https://www.netzeroassetmanagers.org/
- A carbon sink is anything that absorbs more carbon from the atmosphere than it releases – for example, plants, the ocean and soil.
- Source: Stewart Investors investment team and MSCI.
- Carbon accounting quantifies and measures carbon emissions from physical amounts of greenhouse gas emissions to the atmosphere and/or financially by giving carbon a financial market value.
- TCFD is a market-driven initiative, set up to develop a set of recommendations for voluntary and consistent climate related financial risk disclosures in mainstream filings.
- Carbon offsets allow individuals or companies to invest in carbon reducing environmental projects in order to balance out their own carbon footprint.
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