We have set interim targets for emissions reductions that apply to a portion (approximately 14% as of 12/31/21) of our assets under management (our “Net Zero Target Assets”)1. While we believe attention to climate risk is relevant to long-term value, our targets will only be achieved if net zero is important to our clients and they instruct us to achieve that objective in the portfolios that we manage for them. In this regard, it should be noted that we will not depart from client mandates to achieve the objective of net zero, we will not force any client to embrace net zero, and we will not sell companies in any index because those companies do not achieve net zero targets or objectives. As an index manager, we are long-term shareholders on behalf of our clients and we are focused on delivering the index exposure to those clients.
We have set the following three targets that apply only to our Net Zero Target Assets :
1 Our Net Zero Target Assets are dedicated equity and/or corporate bond portfolios that also meet one of the following criteria: (i) the portfolio is managed pursuant to a climate strategy; (ii) the portfolio is a fund or separately managed account domiciled in Europe; or (iii) the portfolio is a separately managed account domiciled in the US, APAC or Middle East, but only if the client has embraced net zero or a similar climate pledge.
2 SSGA defines carbon-intensive industries as the following Global Industry Classification Standard (GICS) subindustries: Electric Utilities, Integrated Oil &Gas, Multi-Utilities, Steel, Construction Materials, Independent Power Producers & Energy Traders, Oil & Gas Refining & Marketing, Oil & Gas Exploration & Production, Diversified Metals & Mining, Airlines, Commodity Chemicals, Industrial Gases, Aluminum, Oil & Gas Storage & Transportation, Multi-Sector Holdings, Diversified Chemicals, Fertilizers & Agricultural Chemicals, Air Freight & Logistics, Agricultural Products, Environmental & Facilities Services, Coal & Consumable Fuels, Paper Packaging, Railroads, Marine, Automotive Retail, Oil & Gas Drilling, Food Retail, Paper Products, Hotels, Resorts & Cruise Lines, Internet & Direct Marketing Retail, Hypermarkets & Supercenters, Precious Metals & Minerals.
3 We consider a company to be achieving net zero if they meet the following definition set by the IIGCC Paris Aligned Investment Initiative (PAII) Net Zero Investment Framework: the company’s current emissions are at/close to 2050 net zero level and they have an investment plan/business model in line with net zero.
4 We consider a company to be aligned with net zero if they meet the following five criteria based on the PAII Net Zero Investment Framework: (i) a long term 2050 goal consistent with achieving global net zero, (ii) short- and medium-term emissions reduction target (scope 1, 2 and material scope 3), (iii) current emissions intensity performance relative to targets (scope 1, 2 and material scope 3), (iv) disclosure of scope 1, 2 and material scope 3 emissions, and (v) a quantified plan setting out the measures that will be deployed to deliver GHG targets, proportions of revenues that are green and where relevant increases in green revenues.
5 Financed Emissions are the greenhouse gas (“GHG”) emissions linked to the companies in which we have invested our clients’ assets on an equity or fixed income basis.
6 Financed Scope 1+2 carbon emissions are the Scope 1 and Scope 2 GHG emissions linked to the companies in which we have invested our clients’ assets on an equity or fixed income basis. Scope 1 emissions are direct GHG emissions that occur from sources that are controlled or owned by an organization (e.g., emissions associated with fuel combustion in boilers, furnaces, vehicles). Scope 2 emissions are indirect emissions from the generation of purchased energy, such as electricity, steam, heat, or cooling. Carbon emissions intensity measures the absolute emissions of an investment divided by the investment volume in USD, expressed as tonnes of CO2eq/$M invested.
The returns on a portfolio of securities which exclude companies that do not meet the portfolio's specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's ESG criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.
All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.
There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
Past performance is not a reliable indicator of future performance.
The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Tracking code: 5949943.1.1.GBL.RTL
Expiry Date : 09/30/2024