Our Target: Net Zero
We are a signatory of the Net Zero Asset Managers initiative because we believe that climate change may present
both risks and opportunities and should be well understood and managed.
Our Targets
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.
Increase AUM invested in assets in material sectors (carbon-intensive sectors) that are (i) achieving net zero or (ii) aligned to net zero to 100% by 2040.
Ensure that 70% of financed emissions in material sectors are net zero, aligned with a net zero pathway, or the subject of direct or collective engagement and stewardship actions and increase this ratio to at least 90% by 2030.
Reduce financed Scope 1+2 carbon emissions intensity 50% by 2030 relative to 2019 baseline at portfolio level.
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 disclose their 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 disclosure in the market across sectors. In addition, we aim to develop more low carbon and climate-aligned investment solutions, products, and analytics in response to climate demand. To that end, we have been investing in talent and data.
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.
"As a fiduciary whose objective is to enhance long-term value for our clients, our focus is on progressing best practices and engaging with companies on their disclosure, plans, and progress regarding the climate-related risks and opportunities relevant to their business, as well as on developing climate solutions in response to client demand.”
Keeping You Informed
We intend to report on the progress we make regarding our interim targets 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.
We’re pleased to share our Task Force on Climate-related Financial Disclosures report. This document provides in-depth information around our governance approach, strategy, risk management, and climate-related targets.
Additionally, our Annual Asset Stewardship Report provides more information about our climate stewardship and broader stewardship efforts.
Your Target: Net Zero
What will this mean for you? We outline the key steps you can take to accomplish an effective transition.
