FIGHTING CLIMATE CHANGE
At Coutts we believe climate change poses as much of a risk to the global financial system as it does to the environment. And dealing with it is urgent.
We carefully consider climate change risks at every step of our investment process to help preserve our clients’ portfolios and funds, and aid the move towards a zero carbon economy.
UNDERSTANDING EVERY HOLDING’S APPROACH TO CLIMATE CHANGE
Our aim is to invest in companies or funds that are resilient in the face of environmental risks and, where possible, contribute to a lower-carbon economy.
Before we invest in anything, we analyse the environmental, social and governance (ESG) factors that could have an effect on that investment, including climate change. We give every potential investment a score to help us decide whether or not we’re doing the right thing.
Here are some of the questions we ask ourselves at the early stages of assessing investment potential:
- does the company operate in line with the commitments made by the Paris Agreement?
- how do they identify climate-related risks and opportunities?
- do they have dedicated staff who focus on responsible investing?
Our approach is based on internationally recognised principles, provided by respected global bodies such as the Principles for Responsible Investment and Climate Action 100+ (an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take steps to reduce their emissions).
reducing our clients' carbon footprint
While our portfolios and funds don’t directly emit carbon, the companies we invest in on our clients’ behalf do. It’s up to us to manage this as effectively as possible and help our clients reduce their carbon footprint.
Against that backdrop, we’ve set two targets to reduce our carbon emissions:
We’ve already reduced the carbon intensity in our Personal Portfolio Funds by 20-30% through shifting allocations to funds with a low carbon designation, while minimising the impact on risk and return.
We measure carbon emissions as ‘carbon intensity’, which covers the amount of CO2 a company emits per million dollars of sales.
Excluding HIGH-IMPACT FOSSIL FUELS
We’ve decided to exclude certain types of company from our investments based on the harm they cause to the environment. We will not invest in any company that:
- derives more than 5% of its revenue from thermal coal extraction for coal mining and exploration
- derives more than 25% of its revenue from thermal coal generation, including utilities that own or operate coal-fired power plants
- derives more than 5% of its revenue from involvement in tar sands – a mixture of clay, sand, water and bitumen that are mined and refined into oil
- derives more than 5% of its revenue from Arctic oil and gas exploration – this is evaluated based on whether a company holds at least one licence or permit for drilling or exploring the Arctic offshore region.
WORKING WITH THE COMPANIES WE INVEST IN TO FIGHT CLIMATE CHANGE
In addition to the activity described above, we also actively use the voting rights we have as shareholders and engage with the companies we invest in with support from EOS at Federated Hermes. And we engage continuously with the managers of the funds we hold, to improve their ESG related efforts.
Here are three key facts about our voting and engagement record that you may not be aware of:
- as well as climate change, we engage with companies on a range of topics including human rights, board diversity, risk management and executive remuneration
- we frequently vote against company resolutions (we voted against management at around 40% of meetings in 2019)
- in 2019 we voted at 100% of the relevant shareholder meetings (over 2,268 times).
When investing, the value of your investments, and the income you receive from them, can go down as well as up and you may not get back as much as you invested.
15 Jan 2021
27 Nov 2020
19 Feb 2019