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Further information about Responsible Investing at Coutts

This page is designed to help you better understand the initiatives we are part of, and what the responsible investing terms mean. 
 

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Supporting global initiatives

We understand that acting responsibly is a collective ambition or goal, and this is why we work with some of the world's leading investor initiatives.

  • UN PRINCIPLES FOR RESPONSIBLE INVESTMENT (PRI)

    Who are they?

    A UN-backed initiative working to create a sustainable financial system and understand the investment implications of ESG factors. The PRI supports an international network of investors who have signed up to the scheme.
     

    How we work together

    Our adoption of these principles underlines our commitment to responsible investing. Our public reports on how we seek to better the environment and society through our investments are independently evaluated by the PRI. We also deepen and share experience and best practices at industry events like those organised by the PRI.

  • CLIMATE ACTION 100+

    Who are they?

    A global body with the world’s biggest corporate greenhouse gas emitters firmly in its sights. It works with investors to ensure the relevant companies take appropriate action to tackle climate change.

     

    How we work together

    As an investor that has signed up to the initiative, investee company engagement is a core part of our work to ensure they’re tackling climate change.

  • UK STEWARDSHIP CODE (FRC)

    What is it?

    Launched by the Financial Reporting Council (FRC), it’s a set of standards aimed at UK institutional investors. The code focuses on the responsible allocation, management and oversight of capital, with the goal of creating sustainable benefits for the economy, environment and society.
     

    How we work together

    The UK Stewardship Code guides the way we manage wealth. Our compliance statement incorporates the code and sets out all the ways we act as a steward for our clients wealth. This ranges from voting and engaging with the companies we invest in, to correctly managing conflicts of interest and incorporating Environmental, Social, and Governance (ESG) factors into our investment decisions. See the voting and engagement section on our Disclosures page for more information.

  • TCFD

    What is it?


    The Task Force on Climate-Related Financial Disclosures (TCFD) is one of the most widely used and recognised sets of guidance for companies when reporting their climate-related risks. Its goal is to improve transparency around how companies and financial institutions, like Coutts, consider the risks and opportunities associated with climate change.

     

    How we work together

    We use the TCFD disclosures when reporting our own climate-related risks and see two great benefits of using the TCFD disclosures. Firstly, it means that institutions worldwide are reporting on the risks related to climate change in a similar way, making it easier to compare and learn from each other. And secondly, reporting on climate change helps us identify our strengths and informs the way we develop our investment strategy in the future.

    Our current TCFD statement can be found on our Disclosures page.

  • NET ZERO ASSET MANAGERS INITIATIVE

    Who are they?

    The Net Zero Asset Managers Initiative is an international group of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius; and to supporting investing aligned with net zero emissions by 2050 or sooner.
     

    How we work together

    Coutts joined the initiative in April 2021 and joins asset managers worldwide in the race to net zero. By working with other players in the industry we are able to share knowledge, collaborate and speed up the transition to a net zero economy. As a member of the Net Zero Asset Managers initiative we are not only committing to net zero investments by 2050, we also commit to using our voice with our partners and within our sphere of influence to encourage others to set net zero commitments.  

  • INSTITUTIONAL INVESTORS GROUP ON CLIMATE CHANGE (IIGCC)

    Who are they?

    IIGCC is a leading global investor membership body and the largest one focusing specifically on climate change. Their members, mainly asset owners and asset managers, include many of the biggest names in the sector, alongside more specialist investors and select financial service providers.
     

    How we work together

    As a member of the IIGCC, Coutts is committed to working actively with other investors to tackle climate change. We are actively taking part in working groups, events and consultations that encourage the whole asset management industry to drive real progress on climate change by 2030 – taking us further towards a net zero and sustainable future.

glossary

Key terms and what they mean.

 

  • Benchmark

    A benchmark is a point of reference against which the performance of a security, fund or portfolio can be measured to evaluate relative performance.

  • Carbon Dioxide Equivalent (CO2e)

    Carbon dioxide equivalent (CO2e) is a standardized unit that measures the global warming potential of various greenhouse gases. The "e" stands for "equivalent," indicating that it represents the total impact of various greenhouse gases converted into the equivalent amount of carbon dioxide based on their global warming potential.

  • Carbon Emissions

    Carbon emissions represents the total amount of carbon emissions emitted into the atmosphere either directly or indirectly by an individual, organization, product, or activity, measured in units of carbon dioxide equivalent (CO2e). It is typically measured in metric tons of carbon dioxide equivalent (MtCO2e) encompassing both direct emissions (Scope 1) from sources like fuel combustion, indirect emissions (Scope 2) from sources such as purchased electricity and heat and emissions from everything else within the company value chain (Scope 3). 

  • Carbon Footprint

    Carbon footprint is a standard measure of the carbon emissions a company or fund emits per million dollars invested. 

  • Carbon Intensity

    Carbon intensity is the standard measure of how much carbon a company emits per million dollars of revenue. 

  • CLIMATE ACTION 100+

    A global body, run by five leading environmental organisations, with the world's biggest corporate greenhouse gas emitters firmly in its sights. It works with investors to ensure the relevant companies take appropriate action to tackle climate change.

  • Climate Change

    Climate change is the long-term shift in the Earth's average temperatures which impacts weather conditions. This could be an increase or decrease in average surface temperature. Global warming refers to the increase in the average surface temperature of the earth, caused by greenhouse gas emissions from human activities. Climate change and global warming are often used interchangeably. 

  • Climate Risks and Opportunities

    Risks and opportunities stemming from climate change that have the potential to affect companies, industries and whole economies. Climate risks are split into physical risks driven by weather events and transition risks driven by regulatory, technological and market changes. Climate opportunities are driven by the transition to a low carbon economy. The timing and impact of these risks and opportunities will differ depending on the sector and the country the company operates in.

  • Climate Scenarios

    Scenarios are hypothetical illustrations of what a future world could look like from a climate change perspective. We use forward-looking data metrics, such as Climate Value-at-Risk (CVaR) and Implied Temperature Rise (ITR) to evaluate the impact of these scenarios on your investments value. 

  • Climate Value at Risk (CVaR)

    Climate Value at Risk (CVaR) is a forward-looking metric that evaluates the potential impact of climate change on investment values by 2100, using climate scenarios with a variety of climate risk assumptions across both physical and transition factors. 

  • Custom Built Funds

    The custom-built funds are managed via our strategic relationships where we (Coutts) define the investment parameters and ESG policies. This means we design the funds and set the Responsible Investing Policy.  

  • Data Coverage

    Data coverage refers to the percentage of the products holdings for which we report on.

  • Environmental

    The impact a company has on the environment. This includes things like carbon emissions, deforestation, water usage or waste production.

  • ESG

    Stands for Environmental, Social and Governance (ESG), the three key categories investors use to assess sustainability factors when making investment decisions, alongside traditional financial considerations.

  • EOS

    EOS at Federated Hermes (EOS) are a stewardship service provider, which engage with companies on behalf of investors to encourage responsible investing behaviour. 

  • Financed Emissions

    In Asset Management, financed emissions, or carbon emissions, are the estimated greenhouse gases emitted by the investments of a fund or service. The scope of what is measured should be defined by the Asset Manager, for us this is Managed Assets. 

  • Financial Conduct Authority (FCA)

    The Financial Conduct Authority (FCA) is the regulatory body in the United Kingdom responsible for overseeing financial services firms and markets to ensure their integrity, transparency, and fair treatment of consumers.

  • Global Warming

    Global warming refers to the increase in the average surface temperature of the earth, caused by greenhouse gas emissions from human activities. Climate change and global warming are often used interchangeably. 

  • Governance

    The company's governance practices which determine how the business is run. This includes its accounting practices, how it negotiates with suppliers, its attitude to diversity and how it contributes to a fair and stable market environment. 

  • Green House Gas (GHG)

    The gases in the atmosphere that raise the surface temperature of planets such as the Earth. They do this by storing infrared radiation which creates thermal energy or heat, slowing causing the average surface temperature to rise. This is measured as carbon dioxide equivalent (CO2e) which is a standardized unit that measures the global warming potential or climate change impact of various greenhouse gases. 

  • Low Carbon Economy

    An economy that produces goods and services with very low carbon emissions or greenhouse gases.

  • Managed Assets

    Assets we invest on our customers’ behalf that are in scope of our responsible investing approach, which represented 84% of AUM as of 31 December 2023. This includes our Coutts Managed Funds (CMaF), Personal Portfolio Funds (PPF) and Discretionary Portfolios (DPS). 

  • MSCI

    MSCI Inc (MSCI) is a leading provider of indexes, analytics and data that are used by investors worldwide to assess and manage investment portfolios, with a focus on ESG (Environmental, Social, and Governance) factors.

  • Net Zero

    Net zero is reached when there is balance between the amount of greenhouse gases emitted into the atmosphere and the amount removed. Not all emissions can be reduced to zero, so those that remain need to be actively removed. We want to reach net zero by mid-century to try and limit global warming to 1.5C and avoid the worst impacts of climate change. 

  • Net Zero Asset Managers Initiative (NZAM)

    The Net Zero Asset Managers Initiative is an international group of Asset Managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius; and to supporting investing aligned with net zero emissions by 2050 or sooner.

  • Net Zero Framework

    Our Net Zero Framework is part of our Responsible Investing Framework and covers the activities we do to consider climate change issues that could impact the returns and resilience of your investments. This includes selection and monitoring of investments through our net zero questionnaire, stewardship (voting and engagement), exclusions and working collaboratively with industry.

  • Physical Risks

    Risks related to the physical impacts of climate change. They are split into acute and chronic risks. Acute risks are event driven risks such as weather events that are becoming more common and severe due to climate change. Examples include heatwaves, floods, droughts and storms. Chronic risks are long-term changes in climate patterns that have a significant impact on the planet. Examples include sea level rise, ocean acidification and rising temperatures.

  • Portfolio Alignment

    An internal assessment, applying industry standards, to assess the extent to which funds are deemed to be achieving, aligned or aligning to net zero.

  • Principles for Responsible Investment (PRI)

    Principles for Responsible Investment is a United Nations-supported international network of financial institutions working together to implement its six aspirational ESG principles. The PRI encourages investors to use responsible investment to enhance returns and better manage risks.

  • Responsible Investing Framework

    Our Responsible Investing Framework is the activities we do to consider the environmental, social and governance (ESG) issues that could impact the returns and resilience of your investments. This includes selection and monitoring of investments, stewardship (voting and engagement), exclusions and working collaboratively with industry.

  • Responsible Investing Policy

    Means the environmental, social and governance (ESG) policies we use to set out how we implement our Responsible Investing and Net Zero Framework.

  • Social

    The impact a company has on society. This includes things like how it treats staff, making sure supply chains avoid unethical labour practices, and the health impact of its products.

  • Sustainability

    In 1987, the United Nations Brundtland Commission defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Sustainable development requires an integrated approach that considers environmental and social concerns alongside economic development. From an investment perspective, this means considering environmental, social and governance (ESG) factors in investment decision making. 

  • Stewardship

    Stewardship is using voting and engagement to influence and communicate with companies and encourage responsible behaviour.

  • The Paris Climate Agreement

    The Paris Climate Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at the UN Climate Change Conference (COP21) in Paris, France, on 12 December 2015. The goal is to limit global average temperature to well below 2°C above pre-industrial levels, aiming for 1.5°C.

  • The UK Stewardship Code

    Created by the Financial Reporting Council, the code aims to enhance engagement between investors and companies.

  • Third-Party Funds

    Funds managed by external asset managers. We do not define the investment parameters or Responsible Investing policies of third-party funds however, we consider their responsible investing practices and  climate strategies as part of our Responsible Investing Framework in our fund due diligence process.

  • Transition Risks

    Transition risks result from the uncertainty created by the global shift towards a low carbon or net zero economy. This includes the impacts of changes in regulation, policy and legal requirements.

  • Weighted Average Carbon Intensity (Commonly referred to as WACI)

    The weighted average carbon intensity (WACI) metric shows how many carbon emissions a fund emits to generate a unit of revenue.

Responsible Investing at Coutts

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. The content on this page applies to our core Discretionary Portfolio Service (DPS), Personal Portfolio Funds (PPF) and Coutts Managed Funds (CMaF) which we refer to as managed assets. To view our key terms and their meanings, please visit our further information page.

Contact Us

Become a client

When you become a client of Coutts, you join a network of exceptional people. Get in touch online or call +44 (0)20 7957 2424 (Relay UK 18001 020 7957 2424) to find out more about our services.

Already a client?

Contact your private banker at any time or call +44 (0)20 7957 2424 (Relay UK 18001 020 7957 2424) for more information.

 

All calls with Coutts are recorded for training and monitoring purposes.

All calls with Coutts are recorded for training and monitoring purposes.

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