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 we’ve 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, really echoing the concern investors have for this business as well as the whole of the sector’s actions around climate change.

* $12.8 trillion

The responsible investment landscape is changing amid climate-change governance risks. We wrote a letter, supported by 60 asset managers and owners, urging the oil industry to address climate change concerns.

What’s the Issue?

At Newton, we believe an active investment approach 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 their 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. Our investment strategies (combined) hold 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, being first published by the UK’s 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 and former Executive Secretary of the United Nations Framework Convention on Climate Change), that the letter was discussed by the CEOs of large oil companies.

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 one large oil company’s AGM 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 another large energy company’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, we believe 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.

1 – published 18/05/18

Important information

This is a financial promotion. ‘Newton’ and/or the “Newton Investment Management” brand refers to the following group of affiliated companies: Newton Investment Management Limited and Newton Investment Management (North America) Limited (NIMNA Ltd). In the UK, NIMNA Ltd is authorized and regulated by the Financial Conduct Authority in the conduct of investment business and is a wholly owned subsidiary of The Bank of New York Mellon Corporation. Registered in England no. 2675952. NIMNA Ltd is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940. NIMNA Ltd’s investment business is described in Form ADV, Part 1 and 2, which can be obtained from the website or obtained upon request.

Personnel of certain of our BNY Mellon affiliates may act as: (i) registered representatives of BNY Mellon Securities Corporation (in its capacity as a registered broker-dealer) to offer securities, (ii) officers of the Bank of New York Mellon (a New York chartered bank) to offer bank-maintained collective investment funds, and (iii) Associated Persons of BNY Mellon Securities Corporation (in its capacity as a registered investment adviser) to offer separately managed accounts managed by BNY Mellon Investment Management firms, including NIMNA Ltd.

Certain information contained herein is based on outside sources believed to be reliable, but their accuracy is not guaranteed. Unless you are notified to the contrary, the products and services mentioned are not insured by the FDIC (or by any governmental entity) and are not guaranteed by or obligations of The Bank of New York or any of its affiliates. The Bank of New York assumes no responsibility for the accuracy or completeness of the above data and disclaims all expressed or implied warranties in connection therewith. © 2006 The Bank of New York Company, Inc. All rights reserved.

Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell this security, country or sector. Please note that strategy holdings and positioning are subject to change without notice.

Material in this publication is for general information only. The opinions expressed in this document are those of Newton and should not be construed as investment advice or recommendations for any purchase or sale of any specific security or commodity.

The enclosed material is confidential and may not be reproduced or redistributed without the prior written consent of NIMMA Ltd. Nothing herein constitutes an offer to sell, or solicitation of an offer to purchase, any securities.