A research report published by Funds Europe has revealed wide variations in the carbon footprint of the investment portfolios of Europe’s largest asset managers.
Published in collaboration with sister publication Corporate Adviser Intelligence, the Funds Europe Carbon Impact Research Report for 2024 offers an overview of how European asset management firms are tackling decarbonisation and where the firms stand on the net-zero map.
Drawing on data from 34 European asset management firms, collectively managing approximately €32 trillion in assets, the report sheds light on key metrics such as carbon footprint measurements, weighted average carbon intensity (Waci), and overall sustainability strategies, while also charting firms’ progress towards their net-zero goals.
The report provides data, covering domains such as a firm’s Science-Based Target Initiative (SBTi) commitments and SFDR Article 8 and 9 fund allocations, to net-zero timelines and membership of climate organisations. The figures underscore the variety of approaches firms are using to align their portfolios with the goals of the Paris Agreement and make real-world contributions to reducing carbon emissions.
Among the key findings, the report reveals wide variations in the carbon footprint and Waci figures across firms. The carbon footprint metric, expressed in metric tons of carbon dioxide per million euros, showed that Fundsmith LLP leads with the lowest carbon footprint at 4.54 tCO2e/€m.
The weighted average carbon intensity (Waci) metric, which measures carbon emissions relative to revenue, also highlighted contrasts. Data has also revealed differences between Scope 1, Scope 2 and Scope 3 emissions within the same firm.
Overall, the report demonstrates the varying approaches firms are taking to decarbonisation, with some firms showing substantial progress and others facing challenges in lowering their carbon intensity.
The report has also shown that over half of the surveyed firms have set net-zero targets for 2050, with several aiming for notable emission reductions by 2030. Aviva Investors and SEB Asset Management have set more ambitious targets, aiming to reach net zero by 2040. Despite these targets, the report notes that transparency remains an issue, with more than half of the asset managers surveyed not disclosing their reduced emissions.
In terms of SBTi commitments, half of the asset managers surveyed disclosed their allocations, with Fundsmith LLP standing out as a leader in this area. 86% of its portfolio companies have either committed to or established targets with the SBTi, further emphasising the firm’s dedication to sustainability and emissions reduction.
Many firms have distinguished themselves with high sustainability credentials. Both Impax and Thematics Asset Management have 100% of their EU-domiciled assets classified under SFDR Articles 8 and 9, which promote sustainable investment. Impax, in particular, allocates a higher proportion of its assets to Article 9 funds, which have stricter sustainability goals than Article 8 funds.
BlackRock leads the industry in terms of ESG expertise, with the highest number of dedicated ESG analysts among the surveyed firms. However, the report has found that ESG teams and structures vary widely, with some firms opting for integrated approaches while others rely on specialist teams.
Read the full report here.
