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Asset management: Engaging on climate change

How active stewardship is supporting greater alignment with the Paris Agreement goals

As a member of the Net Zero Asset Managers Initiative, Coutts Asset Management has an ambition to achieve net zero by 2050 or sooner, and support the goals of the Paris Agreement to limit global warming to 1.5°C.

In May 2022 Coutts announced its interim strategy to achieve net zero emissions across its assets under management (AuM). This included defining the percentage of AuM considered in-scope for net-zero alignment, as well as a short- and a medium-term ambition to increase the percentage of our managed funds and core discretionary portfolios AuM considered to be on a net-zero trajectory: 50% aligned to a net-zero trajectory by 2025, increasing to 70% by 2030.1

A crucial way in which we seek to achieve this is through active stewardship on climate. Through our engagement provider, EOS at Federated Hermes, we engage with the companies we invest in on their climate-related risks and opportunities, encouraging alignment of their activities with the goals of the Paris Agreement on Climate Change. The Paris Agreement sets long-term goals to guide all nations, including the ambition to limit the global temperature increase to 1.5°C. 

 

Our total engagements on climate have risen steadily since 2017

This chart shows the total number of engagements on climate change since 2017. All figures for engagements on climate change, alongside the number of companies engaged with, are sourced from EOS at Federated Hermes and cover the periods of 1 January to 31 December for the years from 2017 to 2022.

The aim of our engagement work is to strengthen the resilience of the companies we invest in, while creating positive change in the real world, not just in our portfolios, as the example from EOS shows.

Siemens Energy AG

Siemens Energy AG is a Germany-based company engaged in the energy technology sector. Following the company’s spin-off from Siemens AG in autumn 2020, EOS immediately started engagement with the new entity.

EOS attended the Siemens Energy AG shareholder meeting in February 2021 and asked a series of questions focused on measures to align the energy sector with the Paris Agreement and to help address the climate emergency. EOS challenged the company to set science-based targets for Siemens Energy AG. In addition, although the company had a net zero ambition, this was only for its own operations, so EOS urged the company to set science-based targets that cover Scope 3 emissions.

On Earth Day, in April 2021, Siemens Energy AG announced its science-based target in line with EOS’s engagement. This covers the company’s target to become climate neutral by 2030 (Scope 1 and 2), which it aims to achieve by transitioning its electricity consumption to 100% green energy by 2023, as well as investing in its own operations.

In addition, following EOS’s request for targets to cover Scope 3 emissions at the 2021 shareholder meeting, the company announced that by 2030, greenhouse gas emissions of products in the gas and power segment (Scope 3) are to be cut by just under a third (27.5%) over a lifetime, compared with 2019 through increased efficiency of products and other measures.

To make a significant contribution in the decarbonisation of power grids, it will successively switch to products free from the potent greenhouse gas, SF6. In 2020, the company also committed to not engage in new business with coalfired power plants. In 2021, the SBTi confirmed that Siemens Energy AG’s CO2 reductions contribute to limiting global warming to 1.5°C in line with the Paris Agreement. 

Disclaimers and cautions

This is for media use and not a financial promotion.

Caution about this article. This article (i) has been prepared for information and reference purposes only; (ii) is intended to provide non-exhaustive, indicative and general information only; (iii) does not purport to be comprehensive; and (iv) does not provide any form of legal, tax, investment, accounting, financial or other advice.

This article should be read together with the full Climate Matters document (with special regard to the Cautionary Statements).

Please see NatWest Group’s 2022 Climate-related Disclosures Report for those views and other information including about our financed emissions and our exposure to heightened climate-related risk sectors.

Notes on the text

  1. NatWest Group plc 2022 Climate-related Disclosures Report, p25. 

For more information about our interim targets, please see pages 38 to 39 of the Net Zero Asset Managers Initiative’s Initial Target Disclosure Report (May 2022). Also refer to Cautionary Note on Climate Data, section 5.7.

Climate
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2023
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