abrdn has set a target to reduce the carbon intensity of assets it manages by 50% by 2030 and has called for effective carbon pricing as critical to enable capital allocation in line with net zero.
The target to reduce the carbon intensity of its assets by 50% by 2030 is against a 2019 baseline[1].
The company has developed a climate change strategy focused on Net Zero Directed Investing (NZDI). This means moving towards the goal of net zero in the real world – not just in its portfolios.
abrdn said it will seek to achieve this goal through “a set of actions, including rigorous research into net-zero trajectories, developing net-zero-directed investment solutions and active ownership to influence corporates and policy makers”.
The goal will be delivered in three ways:
1. Decarbonisation: tracking and reducing the carbon intensity of portfolios. That means continuing to incorporate carbon analysis into the investment process and supporting credible transition leaders and climate solutions.
2. Providing net zero solutions: increasing the proportion of assets flowing into net zero directed investing solutions. abrdn said around 30% of AUM is currently managed in line with net zero 2050. Its aim is to increase this by continuing to develop net zero solutions across all asset classes, actively engaging with clients as well as transitioning its fund range to support net zero goals.
3. Active ownership: voting and engaging with its investee companies to drive change and transition real assets. This will include engaging with the highest financed emitters across equity and credit holdings, seeking transparency on progress against clear transition milestones assessed against relevant standards – such as the Climate Action 100+ net zero benchmark. The company said it will divest from companies where, after two years, it considers insufficient progress has been made against the transition milestones set, unless it’s not in line with the client mandate.
abrdn also announced its own target of net zero in operations by 2040.
Stephen Bird, CEO of abrdn said: “At abrdn we are acutely aware of our obligation to support the drive towards net zero. That’s why I’m pleased we can announce these climate commitments today – both for the investments we manage and our own operations – which build on those we made earlier in the year.”
“But we must be very clear: simply moving our clients’ money out of high-carbon intensity stocks into greener options will not solve the world’s crisis. Decarbonising a portfolio is not the same as decarbonising an industry. To achieve that we need effective engagement with companies, because more seismic change will come from backing credible transition firms on their path from high to low carbon intensity.”
“And asset managers cannot operate in a vacuum. Bolder, collective action by governments is desperately needed. Effective incentives in the form of appropriate carbon pricing are absolutely critical to enable capital allocation in line with net zero and to create an investment environment which rewards companies and investors that go green. We also need a proper debate and action on the role of the tax system in the transition. Pricing carbon needs to be focused on changing behaviours, and ensuring a just transition, on a national and global scale.”
abrdn also has joined the Net Zero Asset Managers (NZAM) initiative which this week published the first Net Zero Asset Managers initiative Progress Report.
[1] Assets initially in scope are Equities, Credit, Active Quants, Real Estate and selected Multi-Asset strategies. abrdn said it is committed to this decarbonisation path on the expectation that climate policy will strengthen globally and will review its commitments on a regular basis to reflect policy developments and client commitments.
