While excluding the most carbon-intensive companies from a portfolio may boost its resilience in a changing world, almost all assets will be compromised if action to mitigate climate change is not accelerated.
As guardians of our clients’ assets, it is crucial that we use our financial power and ownership rights to push companies forward on reducing the emissions associated with their operations and value chains. We have long supported work to limit the global temperature increase to below 1.5 °C and are committed to accelerating the transition to a decarbonised economy.
Our strategy has three components:
We are working with policymakers, both in the UK and overseas, towards more meaningful regulatory action. This includes the UK and Canadian governments’ Powering Past Coal Alliance and the Transition Plan Taskforce.
Investors can be highly influential in encouraging companies to take steps to reduce their own environmental impacts. Our engagement with companies on climate change goes back a long way and, from 2012, we were instrumental in bringing the investment industry together on this topic through a forerunner to Climate Action 100+ (Aiming for A). Today, our climate stewardship programme targets the most carbon-intensive businesses we invest in.
We avoid investing in companies that are highly exposed to changing legislation and regulation aimed at tackling climate change. Accordingly, we do not invest directly in companies that generate more than 10% of their revenue from the extraction, production and/or refining of oil and gas. We assess the remaining exposed industries against the goal of the Paris Climate Change Agreement.
Our approach to traditional oil and gas
Our portfolios restrict direct investment in companies that generate more than 10% of their revenue from the extraction and/or refining of oil and gas. It is part of our approach to avoid investing in/profiting from companies that cause the most social and/or environmental harm. It is important to note that this is not an ethical decision. It is a codification of our long-standing position that, due to the likelihood of legislation and regulation impacting negatively upon the business models of these businesses, we are not going to allocate our clients’ capital to them.
Initiatives
Climate action
We are committed to accelerating the transition to a net-zero emissions economy and protecting the value of our clients’ investments during the transition.
Engagement stories
Siemens (climate)
Climate change represents a significant threat to our planet, ecosystems and communities. As an industrial sector company, Siemens is defined as a ‘high impact’ company for its potential to contribute to climate mitigation. We have engaged with Siemens on climate action since 2023 through the Net Zero Engagement Initiative.
Specifically, we have been asking for a clearer climate transition plan, an increase in scope 3 emission reduction targets and better engagement on climate with suppliers. We attended the AGM in 2024 to reinforce these asks.
By early 2025, Siemens had raised its 2030 scope 3 emissions reduction target from 15% to 30% and expanded disclosure on supplier engagement. It has published a structured climate transition plan including a visual decarbonisation roadmap.
There is more to do, particularly around quantifying the impact of specific actions and we continue to engage with the company.
Zoetis (biodiversity)
Declining biodiversity presents growing systemic risks to environmental stability, economic security, and human wellbeing. As a healthcare company with impacts across animal pharmaceuticals and agriculture, Zoetis is considered systemically important for reversing nature loss. We began engaging in 2024 through the Nature Action 100 initiative.
In our first meeting, we encouraged Zoetis to align its sustainability strategy with biodiversity goals. We discussed biodiversity-related materiality assessments, antibiotic use, sustainable packaging, and consideration of frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD).
Zoetis acknowledged biodiversity has not yet been a core focus but committed to reassessing its material issues. It is shifting from antibiotics to preventive solutions, with vaccines now 25% of its portfolio, and piloting packaging improvements. The company is early in its approach but open to continued engagement.
Unilever (climate)
We have been engaging with Unilever on its climate transition for several years. Following constructive discussions, it became the first FTSE 100 company to seek shareholder approval for its transition plan at its AGM.
We welcomed Unilever’s updated decarbonisation roadmap now provides more detail, especially on indirect emissions. In response to our input, the company added a clear graphic in its reporting, outlining specific emissions reduction measures through to 2030 and quantifying each action’s contribution to overall emissions reduction. This added clarity improves understanding of Unilever’s strategy and carbon reduction plans.
Having pushed on climate-related lobbying and advocacy, we were pleased to see Unilever issue its first climate policy engagement review. This received a 100% score from InfluenceMap, a non-governmental organisation that assesses companies on their climate policy engagement. This is noteworthy, as only a handful of companies have achieved scores of more than 50%.