Building a solid foundation: The latest steps in our net-zero journey

Statement from CEO Jean Hynes and Wendy Cromwell, Vice Chair and Head of Sustainable Investment

Last December, Wellington Management joined the Net Zero Asset Managers initiative as a founding member. This commitment — based on extensive research — is grounded in our belief that climate change poses material risks for companies, economies, and society, and therefore, our clients’ investment portfolios. With our net-zero pledge, we have committed to work in partnership with asset owners on their decarbonization goals, prioritize the achievement of real-economy emissions reductions, and set an interim target for assets to be managed in line with the attainment of net-zero emissions by 2050.

Over the course of 2021, we have worked diligently to establish a solid foundation for our investment teams and clients to measure and achieve net-zero objectives with an emphasis on:

• Discussing net-zero implementation options and measurement approaches with clients
  
• Engaging with companies to promote science-based targets as part of credible climate transition plans
• Incorporating additional carbon-related data into proprietary investment research tools to foster increased transition risk awareness, measurement, and accountability
• Defining measurable net-zero implementation plans for 59 investment strategies across equities and corporate fixed income
• Actively serving on the net-zero advisory board and participating in multiple implementation-oriented working groups

As a result of these and other efforts to turn aspiration into accountable action, we are pleased to announce an initial commitment of US$146 billion in client assets aligned with achieving net-zero emissions by 2050 or sooner. Because we see our net-zero commitment and clients’ investment objectives as inextricably linked, we are assessing clients’ investment portfolios and investment strategies one by one.

Our initial commitment represents assets held in accounts in which:

• A client-approved decarbonization objective consistent with net zero by 2050 or sooner has been established
  
• Individual investment teams have, as part of their existing philosophy and process, committed to engage with their strategy’s highest carbon-emissions contributors with the aim of improving investment outcomes

Importantly, in line with our accountability-driven approach, our net-zero asset-level commitment is initially restricted to strategies that invest predominantly in equities, investment-grade bonds, and high-yield bonds, as emissions data and accepted decarbonization methodologies are currently only available for these asset classes. We plan to expand the scope of addressable asset types over time as better data and methodologies emerge. We hope to then include strategies focused on sovereigns, derivatives, short exposures, and private securities. For a detailed explanation of our implementation approach, please refer to “Our Commitment to Net Zero” white paper.

We are proud of the progress we have made toward net zero and we know there is a long journey ahead. As our ongoing discussions with clients result in the adoption of net-zero implementation plans, we expect more investment strategies and assets under management to become net-zero aligned. We look forward to partnering with additional clients, engaging with companies, and actively participating in industry initiatives that are focused on achieving net-zero emissions by 2050 or sooner.