Stephen Bird

This means developing net-zero solutions across asset classes to enable clients reach their net-zero 2050 goals. The company will also work with current, and prospective clients, to outline how net-zero goals can be delivered alongside risk-adjusted returns.

This builds on ASI’s contribution to the recently launched IIGCC Net Zero Investment Framework as we look to support real world decarbonisation through a number of measures.

The framework provides a foundation for how ASI develops net-zero solutions. The core features of the framework are: 

• Decarbonising by investing in ‘transition leaders’ – that means not just considering a carbon footprint, but taking a forward-looking view and assessing credible transition strategies.
• Allocating capital to climate solutions – that means investing in assets and companies that help the world decarbonise – from renewable infrastructure and low carbon buildings to electric vehicle manufacturers and energy efficient technology providers.
• Net-zero stewardship – that means developing a clear net-zero engagement strategy with milestones and targets that focus on the most carbon intensive companies in the portfolio.

What ASI is doing in practice:

• Its active Equities team is developing an Active Climate Transition (ACT) investment approach based on the foundations of the NZIF. It is focused on identifying and investing in ‘transition leaders’ by bringing together the results of our climate scenario analysis along with our evaluation of company targets and our fundamental research into companies’ decarbonisation potential and strategy. We also focus investment on climate solutions and net zero stewardship as a key lever for influencing decarbonisation.
• ASI’s Fixed Income team is using a combination of analyst expertise, our in-house climate scenario analysis data and external data from sources including CDP, the Transition Pathway Initiative (TPI) and MSCI to develop portfolio and benchmark net zero assessment tools. These tools aim to identify those issuers that may be considered potentially ‘Paris aligned’ transition companies, as well as climate solutions providers.
• ASI is assessing what net zero means in Private Markets and are active members of the IIGCC Paris Aligned Investing Initiative working group for Infrastructure and Private Equities. We have committed to work with all of our Real Estate clients to transition their portfolios to Net Zero by 2050. We have developed a net zero investment framework for Real Estate, which you can access here.
• ASI also incorporates net-zero considerations into our Strategic Asset Allocation (SAA) to reflect climate change as another dimension embedded in risk-return optimisations.

Stephen Bird, CEO, Standard Life Aberdeen, commented: “We are delighted to join the Net Zero Asset Manager initiative today and demonstrate our support for the global net zero 2050 goal.

“This is another significant milestone in our commitment to play a constructive role in the decarbonisation of the global economy and enable our clients to reach their net zero ambitions. To drive that change, we are developing a range of net zero solutions and look forward to working with our clients to increase the percentage of our AUM that is aligned to net zero over time.”

Eva Cairns – senior ESG analyst on climate change, added: “It is important to differentiate between achieving net zero in the real world versus a portfolio. Real-world decarbonisation is key. One could decarbonise a portfolio easily by reducing or eliminating exposure to companies in carbon-intensive sectors such as steel, cement and power generation.

“A portfolio’s temperature alignment score would look very good in that situation. But we will still need these sectors in 2050, and they need investor capital to be able to innovate, decarbonise and transition – and play a significant role in decarbonising economies.

“Therefore, we think that investing in companies with ambitious and credible decarbonisation targets rather than divesting has a bigger impact on achieving net zero in the real world.”