Asset owners are being asked to get behind a new set of “asset owner climate expectations”, laying out minimum standards for asset managers ahead of next month’s climate summit in Glasgow.
“As we approach COP26, we will hear more and more claims to climate leadership coming from asset managers, but how are asset owners and wider society to judge what is best practice and what is greenwash?” said Colin Baines, Investment Engagement Manager at Friends Provident Foundation (FPF) – a UK-based asset owner that helped coordinate the ‘COP26 Declaration’.
The foundation worked with the Charities Responsible Investment Network, the Responsible Investment Network for Universities, and Students Organising for Sustainability on the expectations, which will be launched at COP26.
Until then, the eight standards will not be made public, but they address strategy, asset allocation, active stewardship and transparency. They include net zero strategies covering all asset classes, exclusions, voting practice, engagement escalation, and regular disclosure of holdings, voting record and engagement.
So far, signatories include FPF, the Barrow Cadbury Trust, The Health Foundation, WWF UK, Jesuits in Britain and Jesus College Cambridge. Asset owners have until November 5 to register their interest in backing the standards, which signatories will have to use as a baseline when awarding investment mandates and reviewing manager performance, to help establish them as ‘market norms’.
“We have developed this asset owner declaration to assist and send a clear market signal drawing the line on asset manager greenwashing,” said Baines.
The consortium claims that the decarbonisation of carbon-intensive sectors is being hamstrung by asset managers, many of whom continue to invest in new fossil fuel projects and decline to support shareholder resolutions calling for stronger climate action at companies.
One in six asset managers did not use their voting rights in more than 10% of climate resolutions last year 2020, the group said, citing research from campaign group ShareAction.
The announcement comes as the UK prepares this week to unveil its ‘Greening Finance’ roadmap, backed by the Treasury, Business Department and Bank of England, which will include requirements for companies to disclose detailed Net Zero transition plans.
Over the weekend, an investigation by The Guardian found that corporate sponsors of COP26 have privately criticised the running of the event over delayed decisions, poor communication and an alleged breakdown in relations between COP26 organisers and backers.