A £6bn (€7bn) asset owner group comprising mostly charities, foundations and universities has formulated minimum expectations of asset managers with regard to climate change, with pension funds one of the constituencies targeted as potential additional adopters and beneficiaries.

Among the 24 founding signatories of the declaration, launched in Glasgow today as the COP26 summit continues, are Friends Provident Foundation, WWF UK, Jesus College Cambridge, and Joseph Roundtree Charitable Trust.

Signatories commit to using the declaration’s eight minimum standards in investment manager reviews and tenders to help establish them as market norms.

The minimum expectations include that asset managers have an investment strategy to achieve a 45% emissions reduction by 2030 at the latest, have coal exclusion thresholds aligned with the Global Coal Exit List, and a presumption to vote in favour of all climate resolutions brought by shareholders at company AGMs and provide an explanation for any votes against.

Other of the group’s minimum expectations are that asset managers engage in active shareholder engagement on 1.5°C-aligned transition plans, with short and medium-term science-aligned targets, and implement robust engagement escalation policies.

“The variance in standards from asset managers making similar climate commitments and claims is huge,” said Colin Baines, investment engagement manager at Friends Provident Foundation.

“The variance in standards from asset managers making similar climate commitments and claims is huge”

Colin Baines, investment engagement manager at Friends Provident Foundation

“As asset owners, we wish to send a strong market signal and draw a line on greenwashing by establishing a baseline to judge them against. For example, we expect managers that claim to support the Paris climate agreement or net zero targets to vote in favour of aligned shareholder resolutions.”

Baines told IPE that although the founding signatory group did not include a pension fund, pension funds were “a key audience we wish to assist in judging the claims of their managers”.

“As with all asset owners, and in particular during COP26, pensions are having to navigate a tsunami of climate claims, much of which will be greenwash,” he said.

“To address this, and actually start to see asset manager behaviour change and real world impact, we would encourage pensions to sign up to the declaration and incorporate these minimum standards into their manager reviews and tenders.”

The signatories said they also hoped journalists, civil society, and politicians would use the standards to help them judge what was good practice and what was “greenwash”.  

The £6bn asset owner group’s initative has been co-ordinated by Students Organising for Sustainability and Friends Provident Foundation, in partnership with the Charities Responsible Investment Network and Responsible Investment Network – Universities.

The full declaration can be found here.

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