Transcript

Well Newton has been engaging on the topic of climate change for well over a decade, it's a problem that we are really concerned about as long term investors. And when we’ve been engaging with companies, it's been to try and understand the long-term sustainability of their businesses and what role they're taking in trying to slow down climate change. One sector that will been working with particularly and have been engaging quite a lot with has been the oil and gas sector, but we've been pretty frustrated that they haven't really been responding to calls to action and disclosing more information to investors. So last year, along with another major investor, we drafted an open letter to the Financial Times, calling for the oil and gas sector to take much more action to describe their long-term business strategies and also set concrete emission reduction targets. It was very successful. It was signed by 60 global investors, representing £10.4 trillion in assets under management. Actually at the beginning of this year we submitted a special shareholder resolution at BP's AGM calling and encouraging the company to disclose more information on the sustainability of its long-term business particularly in a low carbon world and to set concrete emission reduction targets. The resolution was really successful and achieved 99.1% global investor support – really echoing the concern investors have for this business, as well as the whole of the sector's actions around climate change.

What’s the issue?

At Newton, we believe active investment plays a crucial role in identifying the future risks and opportunities of climate change for investors. Where we believe companies are ineffectively managing their climate-related risks or opportunities, we will engage to seek further information and more comprehensive action. One recent example provides a good case study of collaborating with other investors to create a wide-reaching, global impact.

How did we engage?

In the run-up to the oil companies’ 2018 AGMs, we wanted to strongly encourage the oil industry to take full responsibility for its emissions and to improve the transparency of reporting in this area. As members of the Institutional Investors Group on Climate Change (IIGCC), we have been supporting the Climate 100+ campaign to target the 100 most significant contributors to climate change. Across the whole of Newton, we own securities in fewer than ten of these companies. We carry out engagement work with these businesses at an individual level, but we wanted to make a bigger impact. To do this, we collaborated with our industry contacts to garner support for a public letter. We believe that collaboration of this sort is an effective way to maintain pressure on the industry, and that it bolsters the overall campaign for greater climate change awareness. Responsible investment analyst Victoria Barron worked alongside her counterparts at Legal & General Investment Management to rally other investors to support these aims.

What was the outcome?

The outcome of this work was a letter,1 supported by 60 asset managers and owners with combined assets of over $10.5 trillion. The letter gained excellent traction in the global press, first being published by the Financial Times and then by other media outlets including The Wall Street Journal, Bloomberg and Reuters. Crucially, we were particularly pleased to hear from Christiana Figueres (chair of the Paris COP21 negotiations) that the letter was discussed by large oil company CEOs.

The letter urged the oil and gas industry to be more transparent and take responsibility for its emissions. Given that some of the largest oil and gas companies held their annual shareholder meetings in the weeks following the letter’s publication, it was an opportune moment for these companies to raise climate change issues and position themselves for a low-carbon future. In particular, we discussed a vote at Royal Dutch Shell’s meeting on which investors would be deciding whether the company should set firm carbon emissions targets in alignment with the Paris Accord. We also encouraged all companies in this sector to clarify where they see their future in a low-carbon world, including concrete commitments and actions to improve climate change issues.

In 2019, we used our voting power to table a resolution at BP’s AGM, calling for the company to address its emissions and share its business model for a low-carbon world. The resolution passed with 99.1% support, making clear how important these questions are to shareholders.

With many investors embracing their responsibility to support the Paris Agreement, it is time for oil and gas companies to do the same. Climate change remains a key area of focus for us, and the work we have undertaken with the oil and gas industry shows our commitment to creating positive change and productively engaging with companies to improve outcomes in this area.

Below is the list of all asset managers and owners who supported the letter to the oil and gas industry in 2018:

  • Aberdeen Standard Investments
  • Axa Investment Managers
  • BNP Paribas Asset Management
  • ACTIAM
  • Aegon NV
  • Amundi Asset Management
  • AP7
  • APG Asset Management
  • ASR Nederland NV
  • Aviva Investors
  • BMO Global Asset Management
  • Brunel Pension Partnership Ltd
  • CCLA
  • Central Finance Board of the Methodist Church
  • Church in Wales
  • Church of Scotland Investors Trust
  • Ecofi Investissements (Credit Cooperatif Group)
  • Elo Mutual Pension Insurance Company
  • Epworth Investment Management Limited
  • ERAFP
  • Ethos Foundation
  • Fidelity International
  • Handelsbanken Asset Management
  • Hermes Equity Ownership Services
  • HSBC Global Asset Management Ltd.
  • Investec Asset Management
  • Kames Capital
  • Kempen Capital Management
  • Legal and General Investment Management
  • LGPS Central Limited
  • Local Government Super (Australia)
  • M&G Investments
  • Merseyside Pension Fund
  • Miller/Howard Investments
  • Mirova
  • MN
  • MP Investment Management
  • NEST
  • Newton Investment Management
  • NN Investment Partners
  • OFI ASSET MANAGEMENT
  • Old Mutual Global Investors
  • Old Mutual Investment Group
  • Ostrum Asset Management
  • P+ (DIP/JOEP)
  • Pædagogernes Pension
  • PGGM
  • PKA
  • Rabobank Pension Fund
  • Robeco
  • RobecoSAM
  • Sarasin & Partners LLP
  • Schroders
  • SKY Harbor Capital Management, LLC
  • Southward Council
  • Storebrand Asset Management
  • Trillium Asset Management
  • Unigestion
  • United Reformed Church Ministers’ Pension Trust
  • USS

1 https://www.ft.com/content/fda63c26-5906-11e8-b8b2-d6ceb45fa9d0 – published 18/05/18

Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

These opinions should not be construed as investment or other advice and are subject to change. This material is for information purposes only. Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell investments in those countries or sectors. Please note that holdings and positioning are subject to change without notice.

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