Wellington joins Net Zero Asset Managers Initiative

WE ARE PLEASED TO ANNOUNCE THAT WELLINGTON MANAGEMENT is joining the Net Zero Asset Managers Initiative as a founding member. Through this initiative, we commit to work in partnership with clients on their decarbonization goals and set an interim target for the proportion of assets to be managed in line with the attainment of net-zero emissions by 2050. This commitment is grounded in our belief — forged by extensive research — that climate change poses material risks for companies, economies, and society, and therefore, our clients’ investment portfolios.

In collaboration with Woodwell Climate Research Center, a leading climate science think tank, we have been researching the physical effects of climate change on capital markets and are integrating those findings into our investment practices. This work has strengthened our conviction that climate science can inform our stewardship approach and enhance the investment decisions we make on behalf of our clients.

As the transition to a lower carbon economy continues, we expect markets to begin repricing assets accordingly. This commitment therefore aligns with our stated objective and fiduciary duty to our clients: Maximize long-term risk-adjusted returns. In fact, we believe this lens may help us identify companies poised to outperform in a lower-carbon economy and avoid those that present less credible transition strategies.

We are pleased to partner with clients who have made this commitment and are interested in developing action plans. We also strongly believe that engagement is a critical mechanism for helping companies appreciate the potential wide-ranging effects of the low-carbon transition on security valuations. Robust transition plans that result in global emissions reductions will help to avoid the worst effects of physical climate change in client portfolios. As a large active manager, we will work with companies to encourage net-zero commitments and monitor their implementation.

We will also continue to partner with clients and the broader investment community to share insights on the physical and transition risks of climate change, climate stewardship, and net-zero investing.

We also acknowledge that the scope for asset managers to invest for net zero and to meet the commitments set forth above depends on the mandates agreed with clients and clients’ and managers’ regulatory environments. These commitments are made in the expectation that governments will follow through on their own commitments to ensure the objectives of the Paris Agreement are met, including increasing the ambition of their Nationally Determined Contributions, and in the context of our legal duties to clients and unless otherwise prohibited by applicable law. In some asset classes or for some investment strategies, agreed net-zero methodologies do not yet exist. Where our ability to align our approach to investment with the goal of net-zero emissions by 2050 is, today, constrained, we commit to embark with determination and ambition on a journey, and to challenge and seek to overcome the constraints we face, in pursuit of the best outcomes for our clients.

As Phil Duffy, president and executive director of Woodwell Climate Research Center put it,

“Wellington’s participation in the Net Zero Asset Managers Initiative is exciting. To limit the most harmful impacts of climate change, science indicates we must achieve carbon neutrality globally by 2050. That will require sweeping changes across all sectors, so moving trillions of dollars into net-zero emissions investments is a significant step in the right direction. We also commend Wellington’s commitment to achieving carbon-neutral operations by 2022. These are the kinds of actions needed to meet the urgency of the climate crisis.”