Climate change statement

Climate change statement

We launched our first sustainable investment fund in 2005. At that time we were convinced all companies would need to adjust to operating in an increasingly carbon-constrained world, and more companies would need to develop solutions to make economies less carbon intensive. Our conviction has never waned, nor has the urgency of the carbon-reduction challenge.

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An imperfect indication of how seriously we take decarbonisation is that the carbon footprint of each of our investment strategies has consistently been at least 80% below its respective benchmark index.* 

We invest only in high-quality companies contributing to a more sustainable future. This leads us to seek out companies with exceptional cultures, run by responsible stewards, and whose products, services and operations help reduce ecological footprints, or advance human development, or both, wherever possible.

Some companies we invest in are delivering, or directly enabling, the emission reductions needed to help meet global 1.5oC warming targets. Obvious examples include renewable energy companies. Less obvious examples include companies operating further up or down the energy supply chain, and companies facilitating energy efficiency, waste reduction and recycling. But even companies supporting other aspects of sustainable development, such as improved health or reduced inequality, need to reduce business-as-usual carbon emissions in their supply chains and operations.

The chart above shows our equity share of scope 1 and 2 emissions for each investee company, aggregated across all of our strategies for each of the past 5 years. The benchmark comparisons use the same approach by assuming benchmarks hold the same total value of investments as the comparative strategy.

*Source: Carbon metrics stated are sourced from Stewart Investors and MSCI as at 31 December 2021.

We engage constructively as owners to encourage companies to do more and move faster to achieve sustainable development outcomes, including transitioning to a lower-carbon world. Our investment approach is bottom-up. We spend time understanding each company and its place in the economy from the ground up. We pick apart the fundamental attributes of each business. We do our best to understand the attitudes of the people who steward each company. 

We also seek to understand how rising to the challenge of a carbon-constrained future might influence the quality of a company, and how each company can help the world achieve its carbon-reduction targets.

A risk with distant targets is that we never arrive at our destination. Our Climate Report sets out a clear baseline and targets for 2025 and 2030. We also aim to invest in companies achieving positive social outcomes and contributing to far-reaching sustainable development challenges such as poverty alleviation, inequality and biodiversity loss. Our carbon targets do not diminish our focus on these other areas, if anything we see them as being deeply and intrinsically connected.

We will continue to critically assess the merits of our investment approach and the goals we set ourselves for helping achieve a lower-carbon, sustainable economy.

A Climate Statement Q&A is also available below alongside this statement and our Climate Report contains further detail on our thinking, reporting and commitments.

Climate change statement Q&A

What are your governance and oversight arrangements for climate change, including for remuneration?

Our investment philosophy and Hippocratic Oath are the primary means by which we ensure our investments are well aligned with climate and other sustainability objectives. Our long-term focus on quality companies that are well positioned to contribute to, and benefit from, sustainable development is not an add-on or side project, it sits at the heart of every investment decision we make.

Supported by our management team and senior investors, each member of our investment team is accountable for ensuring we execute our stewardship responsibilities in line with our philosophy. Our management team ensures that the investment team has the support it needs to deliver on our objectives.

Stewart Investors also participates in and is subject to the governance arrangements of the wider First Sentier Investors (FSI) group, which it is part of. Stewart Investors staff sit on FSI’s Global Responsible Investment Steering Group and ESG Impacts Committee. Stewart Investors’ investment strategies are overseen by FSI’s global investment committee, risk assurance and internal audit functions.

Remuneration for all investment team members is linked to the long-term performance of our investment strategies and our business. We do not believe separate incentives for sustainability are necessary, or effective, in the context of our organisation and its deep commitment to sustainable investment.

Are you committing to net-zero emissions by 2050 and signing the Net Zero Asset Managers Initiative?

We are committed to achieving global sustainable development objectives, including the well below 2oC warming target of the Paris Agreement. We believe that we have been playing a positive role in pursuing sustainable development objectives for many years, and are focused on increasing and improving our contribution.

In keeping with this commitment, we have become a signatory of the Net Zero Asset Managers initiative. Being a signatory to the initiative involves a number of commitments from setting emissions targets to working collaboratively with clients and other stakeholders. 

Consistent with the Net Zero Asset Manager initiative we have set a target of reducing financed emissions by 50% by 2030, using a 2019 base year. We have also set a target of achieving net-zero emissions by 2050. We will review these targets at least every five years with a view to setting targets that are more ambitious. As data improves, we will incorporate scope 3 emissions into our targets.

View our Climate Report for full details on our targets and commitments.

How does your net-zero target relate to other sustainability issues?

Prior to committing to the Net Zero Asset Managers initiative we went through a process to identify and better understand how we can set credible and implementable targets which are aligned with our investment philosophy and process. Historically we have not used targets for any of the issues we find important (you can read more on this at Our approach to sustainable investing).

Our broad understanding of sustainable development is best represented by the Global Footprint Network’s chart which compares human development on the X-axis and ecological footprint on the Y-axis.

Source: Global Footprint Network, 2022 National Footprint and Biocapacity Accounts and,EFCpc&yr=2018. Latest country data for the Ecological footprint is 2018. Graph scale is limited to 10 on the ecological footprint axis and excludes Luxembourg and Qatar.

The implied goal is to move towards the bottom right-hand corner of the chart where human development is high and ecological footprint is low. Historically, we have not set targets for goals like health and wellbeing, living wages, pollution or biodiversity, rather we focus on the quality, stewardship and sustainable development contributions being made by individual companies. Our carbon targets do not change or diminish our concerns for these issues, instead we see them as being completely aligned. We will consider the role other targets can play in our investing as our approach to meeting our current targets evolves.

Nor do our targets diminish our concern that society will need to do more than many of the net zero pathways outlined today suggest. Top-down models of the economy and its emissions bear little relationship to our portfolios which are largely fossil fuel free. Such modelling may suggest our portfolios have already arrived at the 1.5oC world, but we know this is not the case. We worry about commitments being made that are reliant on negative-emissions technologies and an abundance of carbon sinks5 in the future. 

It for this reason we have found Project Drawdown’s climate solutions helpful, as they encompass social, economic and technological changes needed across food, energy, transportation and industry. We will continue to support a lower-carbon future in the global economy by investing in relevant and proven solutions.

Do you have an action plan?

Yes, as described in the statement, our action plan on climate change is focused on two primary areas: 1) how we allocate capital and 2) our engagement with investee companies, including our proxy voting decisions. We also:

  • Support organisations who are better placed than we are to achieve meaningful change, for example, in the area of public policy.
  • Collaborate with investors and other stakeholders so we can learn and achieve shared climate objectives.
  • Continue to commission investment research and, where possible, share it with clients and companies for engagement purposes.
  • Reduce our own operational emissions and offset those we cannot eliminate.

We will remain focused on real-world outcomes. Our history of dedicated sustainable investing means our starting position for portfolio emissions is far below the broader economy. Currently, the aggregate scope 1 and 2 emissions of our investment strategies is around 10% of the total of our strategies’ benchmarks, and individual strategy's have emissions ranging from 5-20% of their respective benchmark’s emissions6. Climate success for the global economy should see that gap narrow, rather than grow.

We expect the companies we invest in to make a genuine and growing contribution to global efforts to reduce emissions and ensure an equitable transition to a zero-carbon economy for their stakeholders. This will occur through the products and services they sell, in their direct operations and in their supply chains.

Rather than judge what level is appropriate through top-down economic models, we believe our bottom-up investment analysis is the best way for us to take a nuanced view of how companies are contributing to decarbonisation. With this in mind, our goal is to see increasing ambition and action from the companies in which we invest. To monitor and evaluate this goal we will collect data and report the results to our clients.

We will also report any noteworthy support or funding we provide to organisations helping the world achieve its carbon aims.

What do you mean by commissioning and sharing research?

For many years we have been commissioning independent investment research on sustainability themes and issues which support our investment decisions. This research spans diverse topics from political lobbying in health care to the lead content in paints. In terms of climate change, we have commissioned research on subjects including sustainable palm oil, alternatives to palm oil, sustainable sourcing of soy, the ecosystem impacts of consumer products, fossil fuel-dependent capital goods, and the loan-book assessment of Asian banks.

Where contractual requirements allow it, we share this research with clients and use it as an important engagement tool with the companies we are invested in. Wherever possible we ask the external providers to publish the research.

Are you involved with recognised industry climate change initiatives?

We have a history of supporting various industry initiatives (and other initiatives) aimed at improving investor understanding and adoption of sustainable investment practices. For example, we were amongst the first investors to commission carbon-accounting7 research in the Asia Pacific (through Trucost); we were founding members of the Association for Sustainable & Responsible Investment in Asia (ASrIA) and are a signatory to the Carbon Disclosure Project (CDP).

For climate change specifically, we are currently signatories to the CDP and have led, and participated in, the Principles for Responsible Investment (PRI) initiatives, including collaborative engagements on deforestation and plastics.

We are also active members and contributors to other related industry forums including the UK Sustainable Investment and Finance Association (UKSIF), the Responsible Investment Association of Australasia (RIAA) and the Intentional Endowments Network in the US (IEN).

Will you invest in fossil fuel companies which are transitioning?

Consistent with our position statement on harmful and controversial products and services, we do not have any direct fossil fuel investments. There are many transition risks for these companies that conflict with our objective of investing only in companies contributing to a more sustainable future and our belief that capital preservation is important for capital growth.

There may be rare cases, particularly for utilities, where a company has the ability and willingness to transition successfully and profitably. In such cases, we would need to be convinced that the transition plan can be achieved rapidly and credibly. Should this occur we will fully disclose any such investment and the reasons for it. 

Do you support and comply with the Task Force for Climate Related Financial Disclosure (TCFD)?

We will report annually on our progress against our climate change objectives. We will model this reporting on TCFD8 to the degree it is relevant to us and we will support our clients in meeting their reporting requirements.

The TCFD is primarily focused on the risk of climate change to the reporting organisation, rather than the effect the reporting organisation has on the climate or its role in driving solutions. Both perspectives are important and we intend to cover both in our reporting.

The TCFD also includes recommendations on scenario analysis. We don’t believe top-down scenarios are relevant or effective for understanding the climate change related risks and opportunities of our investments at portfolio level, however we regularly consider different scenarios at a company level. We will incorporate climate related risks and opportunities in our company level disclosures.

The TCFD is also a useful model for the companies we invest in to use for their reporting. However, we do not see it as a ‘tick the box’ exercise and are more interested in seeing an integrated approach to reporting which covers all relevant issues as part of the company’s strategy. We will encourage companies to refer to TCFD where we believe their climate change reporting needs to be improved. 

Is your engagement and voting strategy aligned with your climate change commitment?

Engaging with companies and proxy voting are core parts of our investment process. In the same way our investment process seeks out quality companies that are well positioned for sustainable development, our engagement and voting revolves around understanding and encouraging improvements in those areas.

One of the expected outcomes from our action plan is increasing ambition and falling emissions from the companies we invest in. We will use engagement to support our companies in the climate challenge. In our Climate Report we provide analysis of company emissions and targets, and will use that information to encourage companies to improve.

Will you be using carbon offsets?

We will purchase offsets for our direct operations. Purchasing carbon offsets9 helps us to incorporate a cost of carbon into our business while supporting the transition to a carbon constrained economy, particularly for those people and communities most vulnerable to climate change.

We do not count these offsets towards our carbon calculations and pay for them as a business expense. We will only purchase high quality offsets, such as those certified by the Gold Standard or Plan Vivo10.


  1. This includes voting for company and shareholder proposals that in our judgement are likely to promote sustainable development and responsible business practices.

  2. The Net Zero Asset Managers initiative is an international group of asset managers committed to supporting net-zero goals.

  3. A carbon sink is anything that absorbs more carbon from the atmosphere than it releases – for example, plants, the ocean and soil.

  4. Source: Stewart Investors investment team and MSCI.

  5. Carbon accounting quantifies and measures carbon emissions from physical amounts of greenhouse gas emissions to the atmosphere and/or financially by giving carbon a financial market value.

  6. TCFD is a market-driven initiative, set up to develop a set of recommendations for voluntary and consistent climate related financial risk disclosures in mainstream filings.

  7. Carbon offsets allow individuals or companies to invest in carbon reducing environmental projects in order to balance out their own carbon footprint.

The race to zero

Welcome to our climate report. In the report we share a baseline of our climate change-related risks, opportunities and impacts, from which our progress towards zero-carbon portfolios and operations can be assessed in the years ahead.

Investment terms

View our list of investment terms to help you understand the terminology within this document.

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Important Information

This material is for general information purposes only. It does not constitute investment or financial advice and does not take into account any specific investment objectives, financial situation or needs. This is not an offer to provide asset management services, is not a recommendation or an offer or solicitation to buy, hold or sell any security or to execute any agreement for portfolio management or investment advisory services and this material has not been prepared in connection with any such offer. Before making any investment decision you should consider, with the assistance of a financial advisor, your individual investment needs, objectives and financial situation.

We have taken reasonable care to ensure that this material is accurate, current, and complete and fit for its intended purpose and audience as at the date of publication. To the extent this material contains any measurements or data related to environmental, social and governance (ESG) factors, these measurements or data are estimates based on information sourced by the relevant investment team from third parties including portfolio companies and such information may ultimately prove to be inaccurate. No assurance is given or liability accepted regarding the accuracy, validity or completeness of this material and we do not undertake to update it in future if circumstances change.

To the extent this material contains any expression of opinion or forward-looking statements, such opinions and statements are based on assumptions, matters and sources believed to be true and reliable at the time of publication only. This material reflects the views of the individual writers only. Those views may change, may not prove to be valid and may not reflect the views of everyone at First Sentier Investors.

To the extent this material contains any ESG related commitments or targets, such commitments or targets are current as at the date of publication and have been formulated by the relevant investment team in accordance with either internally developed proprietary frameworks or are otherwise based on the Institutional Investors Group on Climate Change (IIGCC) Paris Aligned Investment Initiative framework. The commitments and targets are based on information and representations made to the relevant investment teams by portfolio companies (which may ultimately prove not be accurate), together with assumptions made by the relevant investment team in relation to future matters such as government policy implementation in ESG and other climate-related areas, enhanced future technology and the actions of portfolio companies (all of which are subject to change over time). As such, achievement of these commitments and targets depend on the ongoing accuracy of such information and representations as well as the realisation of such future matters. Any commitments and targets set out in this material are continuously reviewed by the relevant investment teams and subject to change without notice.

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