COP26 declaration: asset owner climate expectations of asset management

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COP26

COP26 declaration: asset owner climate expectations of asset management

We are pleased to join 24 other asset owners as a founding signatory to the ‘COP26 declaration: asset owner climate expectations of asset management’. Together we are drawing a line on greenwashing in asset management.

The full declaration, as well as the list of signatories, can be found at www.cop26declaration.uk, or you can download the PDF document on the left.

Friends Provident Foundation believes it is the responsibility of every institution, business, investor, and employer to transition their purpose and operations to be consistent with keeping global heating below 1.5°C, and in line with our Climate Emergency Declaration we will use our influence with asset managers and the market to that end.

The variance in standards from asset managers making similar climate commitments and claims is huge. As asset owners, the signatories wish to send a strong market signal and establish a baseline to judge asset managers against. For example, we expect managers that claim to support the Paris climate agreement or net-zero targets to vote in favour of aligned shareholder resolutions. It is incredulous that so many managers vote against their stated climate objectives, often more than they vote for them.

Amongst the 25 signatories are WWF UKJesus College CambridgeThe Health FoundationNewcastle UniversityJesuits in Britain, and Joseph Rowntree Charitable Trust. We hope the eight expectations will help other asset owners, journalists, civil society, and politicians to judge what is good practice and what is greenwash. Especially as we welcome ever more climate commitments and claims to leadership during COP26.

The signatories all commit to use the expectations in our asset manager assessments, reviews, and tenders to support them to become market norms.

Research has consistently shown the asset management industry failing to address the climate crisis with urgency. Last week’s Net Zero Asset Managers Initiative’s (NZAMI) progress report[i] found that, on average, only 35% of assets under management were committed to being managed in line with net-zero. Last year it was found[ii] that only 21% of the 75 largest managers had a dedicated climate policy, and only 16% had a coal-exclusion policy.

Even amongst more advanced asset managers, such as those used by charity and university responsible investment networks, ambition is lacking. As of May 2020, the majority (54%) had yet to set any investment targets related to climate change, while just 36% had made executive pay conditional on responsible investment performance.

This initiative has been coordinated by our grant recipient Students Organising for Sustainability (SOS-UK) along with Friends Provident Foundation, and in partnership with the Charities Responsible Investment Network (CRIN) and Responsible Investment Network–Universities (RINU).

[i] https://www.netzeroassetmanagers.org/NZAM-Progress-Report.pdf

[ii] https://shareaction.org/reports/point-of-no-returns-a-ranking-of-75-of-the-worlds-asset-managers-approaches-to-responsible-investment