Climate
An urgent challenge and an opportunity to create value for our clients in the long-termAs an active investment manager, our understanding of climate change helps us to manage risks and identify opportunities for our clients’ portfolios. We reflect these considerations in our investment decisions, while supporting the transition to a more sustainable global economy. We believe that every economy, industry and company will need to set a path to next zero to stay competitive.
Our approach
Our approach is governed by Group-wide principles set out in our Group Climate Change Position Statement, which includes an interim update to our Climate Transition Action Plan. Schroders Capital and our wealth management business may adapt their approaches to reflect the nature of their investments – whether direct or indirect – and the characteristics of different asset classes. However, all approaches remain aligned across the Group.
We are committed to managing our clients’ portfolios in line with their investment objectives and to strengthening the long-term sustainability of our business. Our strategy is focused on understanding and assessing where companies, assets and managers stand on their journey towards net zero and to encourage them to mitigate the climate risks embedded in their business models. We have also made significant changes to our own business over recent years to strengthen our long-term sustainability.
To support our climate strategy, we have developed net zero alignment frameworks for both our direct and indirect investments. These frameworks are designed to assess where companies, assets and managers stand on their journey towards net zero, providing a structured and consistent way to evaluate ambition, credibility and maturity.
Alongside these frameworks, we continue to develop tools and dashboards that empower our investors to make active decisions. Thoughtful forward-looking analysis allows us to identify risks and opportunities under different climate scenarios, incorporating physical climate risks, and navigate uncertainty and speed of decarbonisation.
Our active ownership capability enables us to help drive change in transitioning companies, through both engagement and voting. Climate change is one of our thematic priorities for engagement across the asset classes in which we invest.
Our climate engagement objectives focus on encouraging our investments to identify, manage and disclose material climate risks and to set credible transition targets. In practice, this means tailoring our conversations to reflect the context in which each business operates – recognising the nuances of different sectors, geographies and levels of maturity on the path to decarbonisation.
We have developed a climate product framework to help our clients understand the range of strategies we can offer to meet their climate objectives. We identify opportunities in companies or assets that are transitioning or providing products and services for a net zero sustainable economy.
Our operational climate strategy focuses on reducing our energy consumption, transitioning our company car fleet to hybrid and electric, maintaining our annual sourcing of 100% renewable electricity, encouraging sustainable travel practices and engaging with suppliers. These actions help us continue to make progress towards our science-based targets. As we transition to net zero, our primary focus is on direct actions to reduce greenhouse gas emissions. We also see a supplementary role for high-integrity carbon credits.
Climate and nature are two inextricably linked issues and there is increasing focus on the ‘climate-nature nexus’.
We believe it is important that companies start articulating their risks, impacts and dependencies on nature, to help ensure this information can be analysed and integrated into investment decisions.
While identifying nature-related risks in financial markets remains challenging, we have developed NatCapEx, a proprietary model that assigns dollar values to a company’s unpriced impacts on nature. We engage with investee companies and stakeholders, such as sovereign debt issuers and policymakers, to reduce nature-related risks in our clients’ investment portfolios. We have developed a nature product framework, which includes investing directly in nature-based solutions.
Sustainability governance
We believe effective governance is vital for ensuring transparency, accountability and responsible decision-making.
Schroders Capital
Committed to delivering sustainable and impact investing at scale.
Wealth Management
Our sustainable investment approach for our Wealth Management business.