At the landmark COP26 summit, which took place in Glasgow in 2021, we witnessed a renewed flurry of activity on the climate agenda. Governments, financial institutions and companies made pledges on decarbonisation, eliminating deforestation, increasing the number of electric vehicles, moving away from coal-fired power and financing natural capital solutions.
In the run-up to COP26, more than 300 companies committed to achieving netzero emissions. However, data from the Climate Action 100+ Benchmark shows that while 52% of the world’s largest emitters had net zero goals, only 20% had short and medium-term emissions reduction targets and only 7% had targets aligned with the Paris Agreement goals.1 As we look forward to the rest of 2022 and into 2023, a critical focus for us is to use our position as one of the world’s leading stewardship organisations to help turn these ambitious targets into action, on behalf of our clients.
We hope that the upcoming climate talks at COP27 in Egypt will demonstrate that the global climate process has not stalled nor lost ambition due to various global shocks this year. Climate integrity and a holistic view that incorporates issues around a just transition and nature will be imperative for the success of both COP27 and the discussions set to get underway at COP15 on biodiversity in Montreal later this year.
With this accelerating global momentum, Federated Hermes Limited intends to lend the full support of its stewardship and advocacy capabilities to help mobilise that transition. This document outlines our financial exposure to climate risk and how we are responding to rising expectations of our clients and updated regulatory requirements.
Our climate action plans
Federated Hermes Limited has published its Climate-related Financial Disclosures Report for 2021. 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, and our risk management, including public policy advocacy and corporate engagement.
For the first time we are publishing our interim targets across our operational and financed emissions, which are further detailed in our Climate Action Plan. We have also advanced our climate-related metric disclosure, notably in coverage and disclosure of our methodologies, and will continue to enhance this section in our next report.
Recognising there is much more work needed to limit 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
News and views from COP
Engaging for net zero
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.
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: