What this means for our targets
When setting our NZAM targets, we have focused on ensuring they support real world emissions reduction and the ability to capture underappreciated transition opportunities, alongside our strong programme of engagement.
This has led us to prioritise three key targets
ALIGNMENT
80% of the assets in scope to be Net Zero aligned, or in the process of aligning, by 2030
ENGAGEMENT
By 2025, at least 70% of financed emissions in material sectors will be either Net Zero aligned or the subject of engagement action, with that figure rising to 90% by 2030
SHORT-TERM EMISSIONS REDUCTION
A 50% reduction in portfolio emissions intensity by 2030, which crucially will be rebased to the portfolio at any given time to prevent achievement through portfolio optimisation and focus instead on real world emissions reductions.
The prioritisation of the alignment target keeps focus on whether the companies we hold are themselves aligning with Net Zero emissions, rather than a simple focus on reducing emissions of the portfolio (which will change with asset allocation). Complementing this with an engagement target means our stewardship activities will be deployed to hold companies accountable for progress towards their real-world emissions reduction plans.
In our view, achieving our alignment and engagement goals should result in short-term emissions reductions. Rebasing our emissions reduction target means that it assesses the emissions reduction performance of the portfolio we are holding at any moment in time. This is crucial to account for our active approach, to prevent portfolio optimisation through simply selling the highest emitting holdings and to ensure we can invest in best-in-class companies that are driving the energy transition, even if their emissions starting point is higher.
Figure 5 gives the complete list of targets we will be reporting against as part of our NZAM commitment.
If you would like more information on any of the above, please speak to your usual Ruffer contact.
