24 September 2021
Recent LCP analysis revealed that an estimated half of UK institutional investors have “significant” climate risks in their portfolios. To help clients manage and stay on top of climate risks as the UK and other countries transition to a low carbon economy, and after making their own Net Zero commitment, LCP are rolling out a range of initiatives to help safeguard clients and put them in the best position for the challenges and opportunities ahead.
LCP have also signed up to the Net Zero Investment Consultants Initiative (NZICI) which commits the firm to integrating advice on net zero alignment into their investment consulting services, reduce their own emissions, and engage with regulators and the industry to break down any barriers to a net zero future.
LCP will require investment managers to have joined the Net Zero Asset Managers Initiative by 1st April 2022 to be eligible for an LCP “buy” rating. LCP regard this as a minimum standard to ensure that the systemic financial risks from climate change are being addressed. They expect managers to go beyond this by proactively managing climate-related risks to their clients’ portfolios over both the short- and long-term.
In particular, managers demonstrating best practice will be expected to seek real world reductions in emissions through effective voting and engagement, rather than (just) focusing on reductions in portfolio emissions. This is because reaching net zero emissions across the global economy is vital for protecting investment portfolios over the long term. To help tackle the issues of transparency and green-washing, managers will be expected to publish and adhere to specific climate action plans for meeting the commitments made. LCP will continue to incorporate an assessment of an investment manager’s approach to dealing with climate change risk and exploiting opportunities in their advice to clients on manager selection and retention across all asset classes.Source: LCP
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