In focus

Schroders has joined 29 other global asset managers representing more than $9tn of assets in launching the Net Zero Asset Managers initiative.

Sustainability has been an area of focus for Schroders for more than two decades, with our ambition and capabilities in this space continuing to grow and evolve in recent years, and as we look to the future. Climate change and the need to reorient the global economy towards decarbonisation is a key global challenge. As an active asset manager investing across the public and private markets spectrum globally, we have an important role to play in encouraging companies, managers and other stakeholders to plan for and execute on the transition towards net zero carbon emissions, to limit long run temperature rises to 1.5°C.

As part of our ongoing commitment to investing responsibly on behalf of our clients, and addressing climate change as one of the most pressing long-term issues ahead of us, we have decided to join 29 other asset managers in becoming a signatory to the Net Zero Asset Managers initiative, committing to support the goal of net zero GHG emissions by 2050 or sooner. We recognise that this is a challenging ambition – as it should be given the urgency of the threats – and believe this initiative provides a practical and pragmatic route to delivering change.

“Climate change is one of the most pressing long-term issues that we face, and one that I expect to come further into focus as we look to the future. Companies have a fundamental responsibility and imperative to reduce their impact on the planet and re-orient towards a decarbonised economy."

"I’m incredibly optimistic about the power of finance to address the issues that we are currently faced with, and the importance of doing so amid the structural changes climate change demands.” 

Peter Harrison

Our commitment to Net Zero

As part of Schroders, Cazenove Capital is also committing to transitioning our assets to net zero. In line with the best available science on the impacts of climate change, we acknowledge that there is an urgent need to accelerate the transition towards global net zero emissions in line with the Paris Agreement. We believe we have a duty to help deliver these goals to safeguard our clients’ futures, whilst achieving a better world for people and planet.

In this context, our organisation commits to support the goal of net zero greenhouse gas (‘GHG’) emissions by 2050, in line with global efforts to limit warming to 1.5°C (‘net zero emissions by 2050 or sooner’). It also commits to support investing aligned with net zero emissions by 2050 or sooner.

As a significant investor in third-party funds, our organisation specifically commits to:
1) Transitioning our assets under discretionary management to achieve emissions reductions by 2030, consistent with a fair share of 50% global reduction in CO2.
2) Work in partnership with our underlying asset managers on decarbonisation goals consistent with an ambition to reach net zero emissions by 2050 or sooner, engaging with them on these goals at both a corporate level and with the individual managers of the strategies we hold.
3) Report to TCFD disclosures and publish an annual climate action plan from January 2022, reporting on our progress through 2030 and beyond.

Why are we making this commitment across our asset base?

In 2015, national governments from 196 countries committed to reducing emissions in line with 1.5°C by 2050 as part of the Paris Agreement. Governments cannot achieve this target alone – cities, businesses, investors and asset owners must help mobilise the real economy to meet these targets.

The next 10 years will be a decade for delivery as regulatory, transition and physical climate risks increasingly become investment risk. For example, if governments agree to implement a global carbon price on all sectors – a key topic for COP26 later next year – of $100/tonne in line with 1.5°C scenarios, approximately 12-16% of global equity earnings are at risk. Additionally, for those harder to decarbonise businesses, the risk of stranded assets turning into liabilities on balance sheets, eroding corporate value and impacting performance, could be a significant factor.

We believe investing in companies that do not make this transition and do not act to reduce these risks could have material negative financial implications for our clients – inversely, investing in companies transitioning and innovating are likely to provide significant investment upside over the longer term. We are therefore making this commitment not only because it is the right thing to do for people and planet, but because it is the right thing to do for all of our clients.

How will we honour this commitment?

1. Measurement and analysis. We commit to assessing the scope 1 and 2 emissions of our underlying funds, and to working with managers to increase transparency and data quality around scope 3 emissions. We will also actively analyse the carbon value at risk and the physical risk implications of our investments. Finally, we will also monitor the temperature pathways through time of our investments, engaging with managers to align themselves with a 1.5°C scenario.
2. Engagement. As a significant investor in third-party funds, there is limited scope to influence underlying companies. However, we believe that as a client of asset managers, we are uniquely positioned to influence the wider financial services industry, to further the adoption of net zero targets.
3. Clear sign-posting. Our aim over the next 10 years will be to communicate our net zero analysis to managers as early as possible, identify areas for improvement with them, and put in place clear transition plans. We acknowledge that some sectors and industries will be harder to decarbonise, whilst others will achieve this more quickly, and will work with managers to ensure capital is allocated appropriately whether it be investing more in R&D or transitioning business models to adopt cleaner technologies.
4. Reporting. We will publish a climate action plan to signal our net zero commitment to clients and managers, with clear targets and engagement strategies in place, and will report annually on our progress.


Topics:

  • Responsible Investing
  • In focus

The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested. Cazenove Capital is a trading name of Schroder & Co. Limited. Registered Office at 1 London Wall Place, London EC2Y 5AU. Registered 2280926 England. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. For your security, communications may be taped or monitored.