Only together, with all stakeholders playing their part, can we transition to a sustainable future.
In light of recent geopolitical events and in the aftermath of the global pandemic, the UK is at a critical juncture on a path to honour its commitment to bring about net zero greenhouse gas emissions by 2050 and to achieve the Paris Agreement goals this century. As an industry we must continue to support the government by taking further action to consolidate the UK’s ambitious 2050 net zero target. We must help shape and support policy interventions that are needed to make practical steps to Net Zero and a Paris-aligned future.
As investment managers, we honour our commitment to act in the best interests of clients by delivering innovative solutions to meet clients’ sustainability preferences as well as identifying and managing material risks to our clients’ investments, and climate change is one of the single biggest systemic risks facing us today.
This paper alongside the IA position paper on climate change [link], sets out how investment managers are on a journey to fulfil their role in supporting the Transition.
Against this backdrop, the agreed commitments that are set out in this paper are intended to set out a blueprint for targeted action.
Specifically, industry will play its role by:
1. Continuing to embed climate-related financial risks into investment processes, incorporating investee company transition plans and making full use of our rights and responsibilities as stewards of our clients’ assets to support and challenge the companies in which we invest as they transition to Net Zero (Commitment to support high standards of stewardship to help companies transition to net zero, support investment managers and pension funds to develop their climate-related disclosure requirements);
2. Improving transparency on the sustainability credentials of investment products to empower investors to make better informed decisions based on their own sustainability preferences (Commitment to the development of sustainable investment product labels based on objective criteria using common terminology)
3. Supporting the development of best practice, sharing knowledge and expertise. (Commitment to explicitly support for the work of the FCA-PRA Climate Financial Risk Forum);
4. Helping UK government to develop investable opportunities to transition to Net Zero, through the identification and implementation of sector-specific pathways to Transition;
5. Supporting comparable, comprehensive, trustworthy ESG data across a full range of asset classes to support investment managers’ disclosure obligations and advocacy on the need for appropriate policy and regulatory actions to address issues related to use and quality of ESG data and ratings.
6. Supporting investment managers to be sufficiently resourced with the necessary experienced and knowledgeable employees in order to support the transition to a net zero economy through promotion of individuals from a diversity of backgrounds
We welcome the opportunity to work even more closely with UK government on action intended to accelerate change, bringing to bear the investment industry’s collective experience, and bolstering the UK’s position as a global leader in sustainable finance.
