Adopt Science-Based Climate Targets Or We’ll Divest, Says $6 Billion Fund

Bloomberg Quint

January 31 2020, 5:24 PM February 01 2020, 12:30 PM (Bloomberg) —

Liontrust Asset Management Plc is using its leverage as a shareholder to demand that companies set more ambitious targets for reducing their impact on the climate. The London-based firm, which has more than 5 billion pounds ($6.6 billion) in its sustainable investment funds, is telling the companies in those portfolios to adopt emissions targets in line with the Paris Agreement’s goals on limiting rising temperatures.

And it’s telling firms in fields from education to health care to work with organizations like the Science Based Targets initiative to lend rigor to their plans. Liontrust will use its weight in shareholder votes and the threat of divestment to persuade companies to reduce their carbon emissions to zero, according to a spokeswoman. “We are encouraging them to be bold and raise ambition, because we think that will ultimately make them more successful businesses in a low-carbon economy,” said Mike Appleby, an investment manager at Liontrust.

“Many of these ompanies we’ve invested in for many years and they know who we are.” Some of Liontrust’s sustainable funds date back about 20 years. From the start, these funds have excluded investment in companies that derive more than 5% of their revenues from fossil-fuel extraction. Investment firms around the world, including giants such as BlackRock Inc. and Amundi SA, are responding to the fast-growing demand for funds that incorporate environmental, social and governance criteria into their strategies. European funds devoted to sustainable investing pulled in a record 120 billion euros ($132 billion) from clients last year, as the demand for green and ethical options surged, according to research firm Morningstar Inc.

And asset managers are increasingly throwing their weight around to get companies to change their behavior. Brunel Pension Partnership said this week that it plans to vote against portfolio firms’ board members or divest from those that don’t make material steps to align their business with Paris Agreement benchmarks. And State Street Global Advisor said it’s prepared to vote against board members at companies that have been “consistently underperforming” peers in the asset manager’s ESG scoring system.

©2020 Bloomberg L.P.

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