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Setting our climate change expectations for investee companies

Climate change is the defining challenge of our time and, at the international business of Federated Hermes, we recognise the imperative for collective action to limit global average temperature increases to 1.5°C and to adapt to changing climatic conditions. That’s why we have set out our climate change expectations for ourselves and our investee companies. In committing to these climate-focused expectations, we have an opportunity to become a proactive part of the solution.

From extensive fires across California, Australia and in the Amazon to cyclones in Mozambique and Typhoons in Japan, the world has experienced extreme weather events in recent times. Other gradual, ongoing issues facing the world include rising sea levels, an increase in vector-borne diseases and a reduction in agricultural yields. The effects of climate change are not waiting for some far-flung future, we are experiencing them right now – and they will affect our economies, our way of life and the value of investments we make on behalf of our clients. Therefore, significant structural transformation of the economy – at a global and local level – are required.

At the international business of Federated Hermes, we understand that companies, regardless of their sector, industry, or location, need to understand and plan to manage the potential physical risks the climate emergency poses to their operations and supply chains.

For investee companies, the pathway ahead is varied and uncertain, especially in regions where climate policies are absent or insufficient. But we know the world needs to reach net-zero carbon emissions by 2050 – and achieving this will require a far-reaching transformation of infrastructure, buildings, transportation, industry and land use.

We cannot wait for action from governments across the world, the threats posed by the climate crisis are too grave. As such, we have established climate change expectations for ourselves and our investee companies: together, we must commit to understanding our role in fighting the climate crisis and become a proactive part of the solution to accelerate the transition to a sustainable and net-zero economy. 

Ever since our 1983 origin, our purpose has been to provide Sustainable Wealth Creation: generating wealth through investments that enrich investors, society and the environment over the long term. As such, we believe that proactively facing the climate-change challenge will enable investee companies to survive and thrive.

In our climate change expectations, we set out the expectations that we have of our investee companies and highlight the issues we want them to consider, irrespective of where they are on the pathway to a net-zero-carbon economy.

To examine the six climate change expectations that we have set out for ourselves and our investee companies, please download the report here.

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