Climate change hub

Plants in jars

Our climate action plans

Federated Hermes Limited has published its Climate-related Financial Disclosures Report for 2022. This report highlights our progress in implementing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) across the four pillars of the framework. We detail our governance structure, our strategy for managing climate risks and identifying opportunities, our risk management, including public policy advocacy and corporate engagement, and progress against our net zero interim targets with reporting on our financed emissions. For the first time we have also incorporated reporting on nature throughout the report, particularly in the Governance, Strategy and Risk Management sections, following the recent recommendations from the Taskforce on Nature-related Financial Disclosures (TNFD).

We have also enhanced our scenario analysis for public equity and credit investments and outline the expected impact of different climate scenarios on our investments.

Lastly, we continue to report on our financed emissions (Scope 1, Scope 2 and where possible Scope 3) and this year have expanded our reporting to include our direct lending and private equity investments.

Recognising there is much more work needed by governments, companies and investors to limit global average temperature warming to less than 1.5°C above preindustrial levels, Federated Hermes Limited will continue to leverage our engagement and proxy voting capabilities, in addition to our advocacy activities.

Climate-related Disclosures Report

Climate Action Plan

Approach to deforestation

The halting and reversing of tropical deforestation is essential if we are to avoid the consequences of severe climate change and biodiversity loss. As signatories of the commitment to Eliminating Commodity-Driven Deforestation, we have published our Deforestation Policy Statement which sets out how we intend to meet this commitment. Our Approach to Deforestation document describes the actions we have taken so far in our investment, corporate engagement, and public policy advocacy.

Deforestation Policy Statement

Climate diary

The last decade has seen many climate change targets missed or watered down. New COP policy is likely to trigger a resurgence in momentum to meet the most important goals. Here, we list some of the milestones that are worth watching out for:

2020 Net zero
The geometry of net zero
  • Global investors have begun the march towards net zero but in this article, Robert Hall discusses the challenges along the way.
  • Even if the entire global energy supply were to transition to renewables tomorrow, this would not be net zero.
  • If climate impacts cannot be treated as smooth functions then the arithmetic of net zero cannot be treated as one-dimensional.
  • Sustainable investment is about operating within dynamic, volatile and uncertain systems, not seeking comfort in fragile simplicity.
Read the article in full
Electric vehicles: reaching a tipping point
  • Transport remains one of the biggest contributors to global CO2 emissions. Decarbonising the sector is key to mitigating climate change.
  • Motor vehicles are the leading cause of air pollution in the US and, globally, transportation accounts for between 15 and 20% of emissions.
  • To this end, the world will be closely watching Norway in 2025 when the country pledges to be the first to ensure all new cars are electric. In this article, we discuss why automakers are positioning themselves for an all-electric future.
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Our oceans under threat
  • The global community is starting to see the importance of managing its impact on the oceans. Thirty countries form part of the Global Ocean Alliance, calling for 30% of seas to be protected by 2030.
  • In this report, Sonya Likhtman, Emma Berntman and Lisa Lange outline why this target is so important.
  • The oceans and the earth’s atmosphere exist in a balance, with oceans absorbing the excess heat and greenhouse gases from the atmosphere.
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    According to the World Economic Forum, many new renewable energy projects are cheaper than even the cheapest coal-fired power plants. In the US, President Joe Biden has pledged a carbon pollution-free power sector by 2035. In this podcast, a panel of our experts discuss the future of energy in the run-up to this key US milestone:
  • There will be a huge rise in competition from renewable energy firms, and there will be less demand for fossil fuels.
  • European companies have done a lot more thinking about climate change and how they will tackle the energy transition, while US companies are only starting to do this.
Listen to the podcast in full
Abate and switch: steel seeks low carbon solutions
  • According to the International Energy Agency (IEA), the steel industry is currently the largest industrial consumer of coal, which satisfies about 75% of its energy demand.
  • Sonya Likhtman discusses how we engage with companies in this sector and what are the industry’s options?
  • The IEA’s recent Net Zero by 2050 report shows that emissions from heavy industry, including steel, must decline by 93% by 2050.
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China, the largest emitter of CO2 in the world, has committed to reach carbon neutrality by 2060. However, there are increasing international calls for it to move that target date forward to 2050. According to US Special climate envoy John Kerry, without more cooperation from China, the world cannot achieve its target of keeping global temperatures within 1.5C.