Amid the engagement versus divestment debate, we believe in active engagement with companies to transition them from 'brown' to 'green', using our proprietary framework.
This supports them in their journey to low-carbon business models, to drive meaningful change and to deliver sustainable investment returns.
Read the full paper.
Why we urgently need to shift from fossil fuels
Climate change poses a serious threat to our planet and way of life.
The increasing frequency of extreme weather events highlights the urgent need to shift from fossil fuels to clean, renewable energy sources. Scientists warn that we must take immediate and ambitious action to mitigate the severe effects of climate change.
Addressing this global challenge requires a coordinated global response. We need to invest in renewable energy, phase out fossil fuels, and reduce emissions across industries, and particularly high-carbon sectors such as steel and cement.
We need engagement and innovation to make the necessary changes. However, this transition will not be easy. Decarbonising while maintaining growth and living standards is costly - estimates for this green transition run into trillions of dollars by 2050.
In the Asia Pacific region alone, around US$3.3 trillion is expected to be invested in power generation by 2032, with half of that going to wind and solar, and another 12% for energy storage [1].
Active engagement vital to real decarbonisation
Divestment might reduce the carbon footprint of investment portfolios, but it does not address the root problem.
Simply pulling investments from hydrocarbon companies will not achieve the real-world decarbonisation needed to combat climate change.
Instead, we see constructive and sustained engagement as key to guiding these high-emitting companies on their journey to reduce emissions.
Across our actively managed portfolios, we believe that maintaining ownership gives us the power to challenge companies and positively influence their climate-risk management practices.
This approach, we believe, is more effective for driving a meaningful transition than simply divesting from fossil fuels.
By engaging with companies, we can encourage them to adopt more sustainable practices and make a real impact on reducing global carbon emissions.
Our transition framework helps companies move from 'brown' to 'green'
We recognise the importance of strategic engagement in helping companies transition from high-carbon to low-carbon business models.
That's why we created a 'Transition Engagement Opportunities' framework to identify and support companies in this transformation - driving meaningful change and delivering sustainable investment returns.
This framework offers a rigorous yet flexible approach to guiding companies on their journey to becoming low-carbon businesses.
By assessing progress and documenting important qualitative and quantitative milestones, we can produce evidence on the effectiveness of our approach to clients.
Final thoughts
Climate change is the biggest challenge of our era, demanding urgent action from all sectors - especially high-emission industries - and all stakeholders, including governments and investors.
Around the world, governments are tightening regulations to curb carbon emissions through mechanisms like carbon pricing, emissions-trading schemes, and stringent environmental laws. Investors, with their strategic influence and investment decisions, can be key drivers of this transition.
This transition won't be easy. It requires substantial capital and specialised skills to drive the necessary changes.
Our Transition Engagement Opportunities framework is designed to be robust, transparent, and impactful. By asking the right questions and leveraging our expertise, we believe we can identify and support companies on their journey towards a low-carbon future - delivering value to our clients and contributing to global sustainability goals.
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