Some of Europe’s largest asset managers have been accused of “greenwashing” their commitments on tackling climate change, after analysis found that the vast majority of pledges lack short-term, measurable targets on reducing CO2 emissions.

In the second of two articles examining the carbon footprints of some of Europe’s largest firms, research by Ignites Europe shows that many asset managers do not publish details on how they plan to reduce emissions.

This is raising questions over the credibility of the industry as asset managers are increasingly calling on the companies they invest in to publish targets and clear strategies on tackling climate change.

“If these companies aren’t willing to [set science-backed targets], they really don’t give a monkey’s about climate change.”Will RichardsonGreen Element

A review of 11 of Europe’s largest asset managers by assets under management appears to show that only Schroders, Standard Life Aberdeen and Man Group have made net-zero pledges that include some interim targets and deadlines.

Most firms make general statements about cutting emissions in their annual or corporate social responsibility reports. These include commitments to “work with office landlords”, “encouraging staff to take public transport” or promising “greater collaboration with the wider business”.

Will Richardson, founder of Green Element, an environmental management consultancy, says it is vital that all firms commit to science-based targets to avoid “greenwashing”.

The United Nations-backed Science Based Targets initiative defines CO2 targets as science based if they are in line with the scale of reductions required to keep global temperature increase below 2 degrees Celsius above pre-industrial temperatures.

“If these companies aren’t willing to do it, they really don’t give a monkey’s about climate change,” Mr Richardson says.

Rebecca Self, head of sustainable finance at consultancy South Pole, adds: “It is essential that financial institutions get their own house in order prior to talking to the companies they lend to and invest in.

“It is important to have credibility and transparency on how commitments are followed through.”

Amundi and Man Group recently called on HSBC to publish short, medium and long-term targets to reduce the banking giant’s exposure to fossil fuel.

It has also demanded that the bank publish a strategy on how it plans to meet its goals, despite Amundi not appearing to do this for its own business operations or investments.

It did, however, sign up to the Science Based Targets initiative last year.

“Amundi is committed, together with its parent company Crédit Agricole Group, to phase out from coal by 2030 in [Organisation for Economic Co-operation and Development] and 2040 in the rest of the world, as well as to ask investee companies to communicate a coal phasing-out plan in line with the timetable recommended by climate science,” a spokesperson says.

Daniel Wiseman, a climate finance lawyer at ClientEarth, says: “It’s incredibly important that asset managers, just like all other companies, get their own houses in order and ensure they're mitigating their direct greenhouse gas emissions.

“The risk, particularly in the asset management sector, is that their commitments around their direct emission reduction strategies act as greenwash or window dressing for their portfolios, which is they can have the greatest impact.”

Mr Wiseman adds: “Without short-term targets and markers, and a clear description of the strategy that will be taken to get there, it’s not enough.

“More and more asset managers are setting these targets, but there’s really little evidence about what they're doing in practice. Those that aren’t providing that detail are quickly going to be questioned on what they’re doing.”

This week BlackRock, the world’s largest asset manager, pledged to meet the “same standards of transparency” that it asks of the companies it invests in after calling on them to publish their net-zero plans in its latest sustainability push.

The firm says it became carbon neutral in August last year across its Scope 1 and 2 emissions, and in some, but not all, activities counted towards Scope 3, referring to reporting standards known as the Greenhouse Gas Protocol that divide emissions.

BlackRock says it achieved carbon neutrality through “energy efficiency strategies”, buying renewable energy and offsetting.

The firm has not yet published new carbon reduction targets but says it plans to this year.

Austin Whitman, chief executive officer of Climate Neutral, says incentives on how firms are “operationalising” commitments should be integrated into sustainability pledges.

“For example, what incentives are they putting in place for employees to travel less? How are they working with property owners to improve energy usage?” he says.

Mr Wiseman says he believes that firms should build in accountability mechanisms for senior staff.

“[Targets that] are tied to incentives for management, and particularly senior managers and directors [...] are particularly important. It ensures that there’s a certain amount of rigour applied to the measurement process and target-setting process,” he says.

Asset managers ‘greenwashing’ climate pledges

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