Sustainability Forum 2022: what you told us
Sustainability Forum 2022: what you told us
Every six months, we hold a client sustainability forum. The event gives us an opportunity to update our clients on our progress and hear about their priorities for the year ahead.
Our latest forum was held in September. We were delighted to update our clients on the impact of the investments held in our two sustainable funds, which over 2021 reached an estimated 300,000 people while helping to avoid over 100,000 tonnes of CO2 being released into the atmosphere. These strategies have grown to over £1 billion in assets, reflecting the increasing desire of our clients to use their money to invest for a better future.
Source: Cazenove Capital and Lipper. Data to 30th June 2022. Model performance is shown net of AMC of 0.80%, underlying fund fees and trading costs. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. Impact metric data provided, in part by Net Purpose. As at 31st December 2021.
Whilst feeding back on these achievements is a highlight, our priority for the forum is to hear from our clients.
Priority impact themes
Once again, clients told us that their priority theme for investment remains climate change, with inclusion and health and well-being as the next most important.
Q: Thinking of the positive impact you would like your investments to have, how important are each of these themes?
These areas are well reflected in our client portfolios. Investing in solutions to mitigate and adapt to climate change has long been a priority for us. As an example, through our position in the Sustainable Diversified Alternatives Assets Fund, we have allocated funds to HydrogenOne Capital, a listed private assets trust focused on increasing the supply of green hydrogen. Green hydrogen can help us decarbonise hard-to-abate sectors such as steel and cement, and provide a cleaner alternative to fuels in aviation and shipping. Green hydrogen is a key component of the EU’s net zero plans and its development has been accelerated following the Russia-Ukraine conflict given increased concerns around energy security and high gas prices. Against this backdrop, demand could increase by over 200 times by 2030, providing a compelling investment opportunity and abating some 6 billion tonnes/year of CO2 emissions by 2050.
Schroders’ latest plan for nature also reaffirms our commitment to investing in the planet. We are seeking innovative new ways to deploy funds into natural capital solutions, which both combat climate change and preserve our natural habitats.
As part of our voluntary offset program for our sustainable portfolio funds, we recently purchased offsets from the Southern Cardamom REDD+ Project (SCRP), an initiative designed to promote climate change mitigation and adaptation and maintain biodiversity under the United Nations scheme of Reducing Emissions from Deforestation and forest Degradation (REDD+). The project will protect a critical part of the Cardamom Mountains Rainforest Ecoregion, one of the 200 most important locations for biodiversity conservation on the planet. Read more about this here: Cazenove Capital | Ecologi
Influencing for change
We also asked clients about which of the areas in our Engagement Blueprint were most important to them. Protection of human rights and action on climate change were considered the most important.
Q: Our six priority active ownership themes are outlined below. How important is each to you?
Our recent engagement action reflects both of these priorities. We have recently been engaging with companies on human rights violations in the solar supply chain. Schroders also released its climate action plan earlier this year, detailing how we will use our influence to accelerate companies’ decarbonisation plans. This will allow us to meet our own commitment of aligning our portfolios with a net zero scenario.
We continue to make progress on themes raised by clients in our 2020 forum. This event focused on the theme of “responsible technology,” with input from ShareAction and the Friends Provident Foundation. Many of our clients were concerned about how content on social media platforms could be used to spread misinformation - particularly in relation to climate change. We wrote to Alphabet in August 2021 for clarity on how it moderates climate change content. Alphabet has since said that climate misinformation is covered by its content policy, but engagement with the company beyond this has remained difficult.
In 2022 we became a member of the Investor Alliance for Human Rights. Our role includes supporting the collaborative engagement on digital rights with Alphabet and Meta. More information can be found here.
We also invited feedback on three things we’re currently thinking about – do get in touch with any comments or ideas
1. Moving to net zero – interest in investing in transition commodities, climate solutions
The energy transition will create huge demand for transition metals like copper, aluminum and nickel. We have been discussing the investment opportunity this creates. Traditionally, sustainable investment strategies have steered away from commodities, given the concerns around environmental impacts and human rights violations. Our clients agreed that the outlook was interesting but ensuring appropriate due diligence on the underlying investments and their impacts would be a focus, especially around supply chain policies and practices. A just transition was a clear priority.
2. Sustainable and impact private assets - giving up liquidity for higher impact intensity
Our clients see the opportunity to deliver a high-intensity impact through sustainable private assets. While some investors will be unable to give up liquidity, most of our clients cited that a portion of their assets could be invested in less liquid vehicles to deliver greater impact.
3. Collective Action – how can we continue to grow our impact and reach as a community?
While there has been progress on this matter, some investors are still not aware that strong financial returns and investing sustainably are not mutually exclusive. It was felt that better education on this matter will help remove this barrier. Furthermore, it was noted that the younger generation are helping to inspire us to act more sustainably in life and within our investments, and harnessing that spirit for change could be valuable.
We will continue to listen to our clients and embed their valuable insights into our investment process. Please do get in touch with us with your thoughts.
The opinions contained herein are those of the author and do not necessarily represent the house view. This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Cazenove Capital does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. This does not exclude or restrict any duty or liability that Cazenove Capital has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory system. Cazenove Capital is part of the Schroder Group and a trading name of Schroder & Co. Registered Office at 1 London Wall Place, London EC2Y 5AU. 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 and monitored.