Climate change and COP28 updates
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.
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
News and views from COP
Federated Hermes Limited joins the One Planet Asset Managers initiative
The OPAM initiative was set up in 2019 to accelerate the understanding of climate-related risks and opportunities within long-term investment portfolios.
Federated Hermes Limited is a member of the Natural Capital Investment Alliance, as part of The Sustainable Markets Initiative.
The NCIA aims to accelerate the development of Natural Capital as a mainstream investment theme and to engage the global USD 120 trillion investment management industry to mobilise this private capital efficiently and effectively for Natural Capital opportunities.
Latest climate insights
EOS, our stewardship service, engages with companies around the globe, encouraging them to put in place strategies that are consistent with the Paris Agreement goals, alongside goals and targets aligned with a 1.5°C pathway.
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:
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.
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.
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.
- 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.
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.
