We know that climate change is important to you, and next year we will share more information on this in our Spring newsletter, however this is what our primary investment manager, Schroder, is saying about it…
With COP26 recently coming to a close, the focus on climate change and the steps we need to take to mitigate an all-out climate crisis has never been greater. As asset owners we have a crucial part to play in the transition to towards ‘net zero’ and limiting the global temperature rise to 1.5 degrees above pre-industrial levels (the level most experts predict we need stick to in order to prevent the worst effects of climate change). But the journey towards decarbonization is not a straight forward one – while independent bodies such as the Task Force on Climate Related Financial Disclosures (TCFD) have provided guidance on what reporting best practice should look like, deciding on a suitable investment approach remains highly subjective. One consideration is to simply divest from those companies with the highest carbon footprint – for example to remove oil and gas companies (and other extractors of fossil fuel) from the investment universe. And while that does have the immediate effect of lowering the carbon footprint of the Atlas Multi-Asset Portfolio Funds (the Funds) you invest in, in reality it does very little to tackle the long term issue of how to replace our reliance on those fuels – after all, the stocks we sell will just be bought by someone else who might not share your concerns!
That is why we continue to work in partnership with our investment managers to deliver a default investment strategy which not only fully integrates sustainability into the investment process, but actively considers climate risk and focuses on delivering a reduced level of carbon intensity relative to its benchmark. As when any socio-economic change comes about there will inevitably be winners and losers – those companies that can transition their business models to meet the needs of a changing world, and those which fail to adapt and are left behind – and having the ability to distinguish between those companies we believe is crucial if we are to successfully deliver against our investment objectives.
We are also firmly of the belief that active engagement is one of the most powerful tools at our disposal in facilitating change. By remaining invested in companies we have the ability to hold them to account, to use our voting powers to promote positive change and help drive them towards better more sustainable practices. Where engagements are unsuccessful and don’t yield the results we expect our investment managers to retain the ability to vote against company management to block specific resolutions where needed (a right we would forgo should we elect to disinvest). And of course if all engagement fails, the opportunity to divest remains, which when used in the right context can send a powerful signal of our commitment.
You can find out more about all of the available investment funds here, as well as reading the Trustee’s Statement of Investment Principles.