How we are working together with all parties to build sustainability

The fourth stated goal of the UN Conference on Climate Change (COP26) is ‘working together to deliver’. This might seem an obvious requirement for such a major challenge as addressing climate change but it belies the scope and synergy that is needed to stop global warming from drastically changing our world for the worse.

Finance, as the lifeblood of the global economy, will be critical in enabling the partnerships and the rewards needed to bring about the transitions to sustainable living that will reduce our carbon output. As a bank and a Principal Partner of COP26 our role here is key.

How is Coutts working with others to deliver change?

Engagement with companies and the industry is one of the most impactful ways we can drive change. We work together with our engagement partner, EOS at Federated Hermes, to tackle climate change at the companies held in our Coutts funds, managed in partnership with BlackRock. However, where we invest in funds managed by other fund managers, we also run active engagement, selecting best in class funds for ESG ratings and then constantly looking for ways to improve these ratings.

Our due diligence, dialogue and drive for transparency with our fund managers helps build a mutual interest for a transition to sustainability. For example, this year we were able to get an emerging markets debt fund to establish their own coal policy, providing a clear route away from investment in carbon-based industries and potential stranded assets. At a US large cap fund, we were able to ensure portfolio decision making around ESG and at a UK mid cap fund we scrutinised their supply chain with onsite visits and secured a commitment to sell holdings where there had been no significant improvement to their ESG scores.

Investor coalitions:

Working with Climate Action 100+ we have been able to focus on the world’s 100 largest companies, who account for 80% of industrial emissions, engaging with them to pass shareholder resolutions on sustainability that align with the Paris Agreement. Without the coming together of investors, we would have been unable to table motions to address climate change at a recent board meeting of a multinational chemicals firm.

Likewise, our membership of the Net Zero Asset Managers Initiative, which now represents $43 trillion worth of assets – close to 50% of the global total – has enabled us to share knowledge and build best practice among a diverse group of global investors.

In addition to this, our membership of the Institutional Investors Group on Climate Change (IIGCC), helps us engage with governments on biodiversity as well as on net zero initiatives.

Every level matters

Large scale initiatives matter, but they can feel remote. That’s why we want to help make the difference for our clients. Our special report: The Power Of Sustainability, details how we have worked together with invested clients who are benefitting, along with the environment, from sustainable economies.

These client relationships have helped support:

• Adaptogen Capital: a firm working towards sustainable energy technologies and new energy storage and distribution networks
  
• Baukjen: whose award-winning business structure has created sustainable fashion supply lines and circular economies which benefit impoverished areas
  
• Extreme E: A racing showcase series for electric vehicles, new e-tech and sustainable education models
  
• Once A Year: A charity focused on the environment, currently supporting South African ocean conservation and education project I Am Water.
  

These are just some examples of how we continue to work with, and be inspired by, our clients. To create a reciprocal ecology for investing sustainably, we must have a working culture that remains adaptable to work with all the oncoming challenges of climate change. As a bank and an investment house, we can only do that by working together with all parties, from individual clients to financial institutions and national governments.

At COP26 all of these partnerships will be crucial because they show a unified front that is proactive on global standards, enabling Coutts to put its name behind the clear momentum in finance that the world’s policy setters and governments will be addressing. By investing with us, our clients have an amplified voice in building a greener world far beyond a greener portfolio.