Few can deny that the climate crisis is becoming increasingly urgent. But with Nationally Determined Contributions (NDC) to the Paris Agreement currently lagging expectations, even the 2°C target is starting to look unfeasible. The finance sector is rightly being called upon to drive progress and it is with this in mind that think tank, InfluenceMap, released its Asset Managers and Climate Change 2021 report in January.
As well as considering the financial sector as a whole, the report looks at the investment portfolios of the world’s 30 largest asset management groups. These managers were found to deviate from a Paris-aligned target by between 8% and 27%; 1 they were ultimately overweight in companies deploying brown technologies and underweight in those deploying green technologies in climate-critical sectors such as automotives, oil & gas production, coal production, and electric power.
If this sounds all too familiar, then there is a silver-lining; the report highlights that on climate-related matters, investors are engaging more emphatically with companies. Many are going beyond merely considering operational emissions to ensure that companies have robust, Paris-aligned policies in place.
In InfluenceMap’s research, we were among five asset managers who received the highest score of A+ for our climate-related engagements and resolutions. This score is reserved for firms with the most robust and transparent stewardship programmes, who can evidence their lobbying and engagement efforts around the transition of company business models.2 Notably, InfluenceMap found that 86% of the votes we cast in 2020 were in favour of climate-relevant resolutions.3
Not only does the score recognise our commitment to the Paris Agreement, it also celebrates our dedicated stewardship team ─ EOS at Federated Hermes (EOS) ─ and the ‘engagement and ESG focus’ of the Federated Hermes group.4
To read the report in full, head over to InfluenceMap’s website.