Our environmental impact
Our aim is to play our part in the move to a net zero economy. Achieving this depends on us understanding the impact we have on the environment, both directly through our operations and indirectly through the investments we make. We will actively promote approaches that mitigate and minimise our impact on the natural world.
The world’s response to COVID-19 only served to underscore the impact that can be had if people, nations and businesses work together. Despite the inevitable postponement of COP26, 2020 did not see a decrease in effort towards slowing and reversing the climate crisis. Businesses came together to call on the UK Government to drive a green recovery. Recognising the part Rathbones can play in the transition to a net zero economy, we have continued to track and reduce our operational footprint and are working to understand the impact of climate change on our investment portfolios.
As a business we continued to support CDP (formerly the Carbon Disclosure Project), both as an investor and as a responding business. With CDP’s move to align its framework to the Task Force on Climate-related Financial Disclosures (TCFD), additional financial services questions were introduced in 2020. Our score of B reflected our willingness to respond to this new methodology and we are confident that delivering on a number of existing projects, such as the setting of targets and integration of ESG factors into the decision-making for our investment portfolios, will continue to improve our score.
We support the work of the TCFD and in 2020 produced our first response in alignment with its recommendations in our annual report. Allied to the work being undertaken by our business to integrate environmental, social and governance data into our investment decisions and engagement process we have created a cross-functional team to oversee our approach. The responsible business committee has oversight of both our responsible investment programme and our environmental programme and supports their interaction as well as approving our TCFD, PRI and CDP disclosures.
With the delayed climate talks in Glasgow now in 2021, and the strengthening commitment from government and regulators supporting the transition to a low-carbon economy, and the UK’s aim to achieve net zero by 2050, the need for business to understand and act with regard to our climate impact will only grow. Aligning work across our operations and investments will help us play our part in the economy’s transition. We have several priorities for our environmental programme including:
- investigating our net zero transition pathway, including understanding the impact of climate on our investment portfolios
- setting targets across our operational footprint
- transitioning our offices to green energy
- expanding our external disclosures for example TCFD and CDP.
At Rathbones, we are undertaking several steps to increase our understanding of climate risks and opportunities. Along with robust management of our direct operational risks, we believe it is in our clients’ best interests for the companies in which we invest to adopt best practice in managing environmental, social and governance risks.
We recognise not only that our business and those businesses in which we invest are impacted by climate change, but also that the choices we make as stewards and allocators of capital could either exacerbate, or alleviate, the climate crisis.
Alongside our interim results in July 2021, we announced a group-wide commitment to achieving a transition to net zero by 2050 or sooner. In October, we shared our interim targets for the reduction of our scope 1, 2 and 3 emissions1 .These will be set in alignment with the Science Based Targets initiative (SBTi) as part of our efforts to reduce greenhouse gas emissions and limit global warming to 1.5°C above pre-industrial levels.
To do so, we will include direct operational emissions, alongside those linked to suppliers and investments. Using 2020 as a baseline year, we will work to achieve a 42% reduction in operational and supply chain emissions by 2030, in conjunction with 57% of underlying holdings to commit to or set an SBTi aligned target by 2030. This is in line with Group’s objective of achieving 100% investment coverage by 2040.
Delivering on this will see us build on the 79% reduction in operational carbon intensity per full-time employee since 2013 and complete the transition of our offices to renewable energy sources by the end of 2025. This will aid Group in meeting the 2025 internal target of a 21% reduction across our scope 1 and 2, and operational scope 3 emissions.
Progress towards all these targets will be tracked through Group’s annual public reporting.
Whilst we recognise that the assets in which we currently invest account for the majority of our footprint, this commitment reaches across every aspect of our business and we are pleased to have several initiatives already in place to support our transition:
- we have calculated our emissions across all three scopes, including via our suppliers and the investments we make on behalf of clients. Our scope 3 calculations are based on the most current information available. We expect this information to improve as more companies comply with a recognised standard of reporting
- our office footprint continues to transfer to renewable energy sources, and by the end of 2025 our UK offices will be using 100% renewable energy
- whilst we recognise the need to drive reduction before we focus on removal, we will transition our annual operational offsetting to include nature-based solutions, for example the restoration of forests
- in March Rathbone Greenbank Investments (Rathbones’ specialist ethical, sustainable and impact investment business) joined the Net Zero Asset Managers initiative, providing a clear roadmap to catalyse the continued transition of their investment portfolios to net zero greenhouse gas emissions by 2050 or sooner
- we consider engagement with companies on climate-related issues to be very high on our list of priorities. In addition to being part of two long-running major industry collaborations, our engagement programme continues to undertake ad-hoc engagements with companies on climate-related issues and is supporting more climate-themed resolutions than ever before.
As part of our commitment to transparency, we will share updates on our progress through our annual reporting. To find more information on our current approach and initiatives, please visit our Annual Report and Accounts where you can also find our TCFD statement, our Group Climate Change Statement and our Environmental Impact Report.
1: Scope 1,2 and 3 as defined by the WRI GHG protocol
The impact of our investments
As a provider of investment and wealth management services we recognise the need to improve our understanding of the climate-related risks which will impact our clients’ investment portfolios, as this is the material proportion of our footprint.
Like many businesses our footprint has been impacted by COVID-19. In 2020, our carbon footprint reduced by 46.3% with total emissions of 1,123 tCO2e (2019:2,091 tCO2e). With our total funds under management increasing by 8.6% to £54.7 billion, our emissions intensity (tCO2e/£bn FUMA) has correspondingly decreased by 50.6%.
Whilst our footprint has evidently reduced this year, we recognise that this level is unlikely to be sustained. Our commitment to reducing our footprinting our operations in parallel with offsetting of our residual emissions remains and we purchased and retired 1,171tonnes of CO2e credits in 2020 to compensate for our 2020 residual emissions and the additional emissions from our restatement of 2019 scope 3. Having reviewed our approach to offsetting we are furthering our partnership with ClimateCare to identify high-impact projects which reduce carbon emissions and enable community development. Each of these exciting projects was selected in line with our support of the UN’s Sustainable Development Goals and is certified by internationally accredited bodies. As we set long-term targets we will continue to assess the role of offsetting, including the source of our credits.