Expectations on climate policy and net zero strategies issued to help peers assess credentials of asset managers.
UK-based asset owners in the education and charity sectors have set out minimum expectations for asset managers’ climate policies, covering strategy, asset allocation, active stewardship and transparency.
The declaration will be published in full at an event held at the Federated Hermes Fringe Festival during the COP26 summit in Glasgow next month, along with an updated list of signatories.
It has been drafted in response to the “numerous” statements and commitments to climate action made by asset managers in the run up to COP26. The asset owners say the declaration will help peers, policymakers and other stakeholders to assess the positions of individual managers against a “comprehensive” list of minimum standards.
The declaration outlines out minimum standards and covers expectations of managers’ net zero strategies, with reference to AUM coverage, exclusions, voting practice, engagement escalation, regular disclosure of holdings, voting record and engagement.
The initiative is the result of a collaboration between sustainability-focused charity Friends Provident Foundation, Students Organising for Sustainability, the Charities Responsible Investment Network (CRIN) and the Responsible Investment Network – Universities (RINU).
CRIN and RINU, which represent 27 charitable foundations, universities and colleges, were involved in the drafting and agreement of the declaration, and members have agreed to public endorsement by the networks.
Signatories to date include the Barrow Cadbury Trust, The Health Foundation, WWF UK, Jesuits in Britain, and Jesus College Cambridge, all of which have committed to using its minimum standards in their asset manager reviews and tenders to help establish them as market norms.
Organisers say at least 16 signatories have signed to date, while several others currently going through internal sign-off processes to add their name as individual organisations.
Almost 130 asset managers collectively managing US$43 trillion have signed up to the Net Zero Asset Manager Initiative, which requires members to observe a range of commitments, including working with asset owner clients to decarbonise portfolios consistent with net zero 2050 pathways.
The NZAMi, which operates under the auspices of the UN’s Race to Zero campaign, is expected to publish interim targets for net zero before COP26, but members have divergent track records on climate action, including withdrawal from fossil fuel investment and support for ESG-related shareholder proposals at AGMs.
“It is often difficult to know what is good practice, what is greenwashing, and what is just not ambitious enough in the face of the escalating climate crisis,” the asset owners said in a statement.
“As the owners of the capital being managed, we expect to see meaningful, climate science aligned, investment policies being announced and put into practice,” said Colin Baines, Investment Engagement Manager, Friends Provident Foundation, a CRIN member.
“Jesus College Cambridge believes that long-term asset owners must take a lead in transitioning the global economy to a net zero carbon future. However, we can only achieve this by working with asset managers, who are the organisations with the most influence over the public and private financial markets. We want to see action that makes an impact, with active engagement on transition plans, shareholders resolutions and directly with boards,” said Dr Richard Anthony, Bursar, Jesus College at the University of Cambridge, a member of RINU.
The declaration launch will include a panel discussion by Carbon Tracker founder Mark Campanale, Colin Baines of the Friends Provident Foundation and Larissa Kennedy, President of the National Union of Students.