Environmental, Social and Governance


Our Target: Net Zero

We have begun our journey. As a proud signatory of the Net Zero Asset Managers initiative, we believe that there is an urgent need to accelerate the transition towards global net zero emissions.


Our Targets


In establishing our net zero targets, both in interim by 2030 and ultimately by 2050, we are playing our part in helping to deliver the goals of the Paris Agreement and ensure a just transition to the low-carbon economy.

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We have set the following three targets for our in-scope assets, based on the IIGCC Paris Aligned Investment Initiative’s Net Zero Investment Framework.


Our Approach


We have set targets for our in-scope assets, using the IIGCC Paris Aligned Investment Initiative’s Net Zero Investment Framework as our base starting point.

Given our business model, our aggregate portfolio broadly reflects the market, and our perspective is that of a universal owner of assets. This means that real-economy carbon emissions reductions, across all sectors and all regions, are critical for our ability to meet our Net Zero goals by 2050. Our strategy for increasing the proportion of assets to be managed in line with net zero is tailored to the key levers we have to further the transition to a low- carbon economy.

Engagement

Our primary lever is engagement with investee companies, clients, and market participants including policymakers and index vendors.

Within engagement, we encourage investee companies to adopt de-carbonization goals and/or energy transition plans, advocate policy-makers to promote climate related disclosures, and work with index vendors to offer net- zero-aligned indices. Our stewardship efforts are focused on driving broad climate action in the market across sectors as well as more targeted action for companies with the most significant emissions. In addition, we aim to develop more low carbon and climate-aligned investment solutions, products, and analytics to our clients. To that extent, we have been investing in talent and data and are doubling the staff of the Engagement Team in 2022.

Intended to drive credibility and accountability, our approach is based on considerations of clients, methodology robustness and data availability, as well as our business model. We include assets from clients who have adopted net zero targets or similar climate commitments, or may be reasonably expected to do so. We consider portfolios invested in equities and corporate fixed income. These asset classes, net zero eligible, represent 68.5% of AUM, of which 20.5% are included in our interim targets ($582.7 billion or 14.1% of our total AUM as of December 31, 2021).


Our Future Plans


As we work to increase our in-scope assets to 100% over time, we intend to actively engage with clients to encourage them to adopt net zero goals and consider strategies that are aligned with net zero. In addition, we will look to expand coverage to other asset classes (e.g. sovereign bonds, cash) where we have material AUM, as clear methodologies develop in the industry.

“We must do our part to hold ourselves accountable for progress. Last April, we joined the Net Zero Asset Managers Initiative to ensure our portfolios reach net-zero greenhouse gas emissions by 2050 or sooner and set interim targets for 2030.”

– Cyrus Taraporevela CEO State Street Global Advisors


Keeping You Informed


We intend to report on the progress we make regarding our interim targets on a yearly basis and will review (and potentially revise) our targets as warranted. We highlight that the methodologies and data calculations used in climate target setting are likely to evolve and are subject to change.

A Task Force on Climate-related Financial Disclosures report will provide details around our governance approach, strategy, risk management, and climate-related targets. Additionally, our Financial Reporting Council stewardship report will provide an update on our stewardship efforts.