London, 08 June 2022: Newton Investment Management Group (Newton), part of BNY Mellon Investment Management, has published its targets towards the goal of achieving net zero emissions across its investment portfolios in the context of its commitment to the Net Zero Asset Managers initiative.
Newton has been a long-standing supporter of the Paris Agreement on climate change and believes that it is critical that its financed emissions (the greenhouse gas emissions associated with the investments it makes on behalf of its clients) are addressed through transition plans. It has therefore aligned itself with the Science Based Targets initiative approach which involves a commitment to an interim target of 50% of financed emissions covered by credible transition plans by 2030, and 100% of its financed emissions covered by 2040.
While Newton’s final target of having 100% of its financed emissions covered by credible transition plans by 2040 necessarily implies that all of its global assets under management (AUM) will be committed to net zero emissions by that point, currently 67% of its AUM (as distinct from financed emissions) are subject to the initiative.1 Cash, derivatives, sovereign bonds and certain quantitative solutions within the multi-asset area are excluded until better data and methodologies emerge to address them. Importantly, the firm will focus on ensuring that financed emissions (rather than simply AUM) are covered by net-zero plans.
Commenting on the targets, Euan Munro, Chief Executive Officer at Newton Investment Management, said: “Failure to address climate change will have direct impacts on communities, livelihoods, peace and stability and quality of life, as well as far-reaching implications for people’s investments and savings. A healthy and vibrant world is ultimately a world in which investment goals can better be achieved, and in that context net zero is a vital commitment for us”.
Failure to address climate change will have direct impacts on communities, livelihoods, peace and stability and quality of life, as well as far-reaching implications for people’s investments and savings. A healthy and vibrant world is ultimately a world in which investment goals can better be achieved, and in that context net zero is a vital commitment for us.Euan Munro, Chief Executive Officer
Therese Niklasson, Global Head of Sustainable Investment at Newton Investment Management, added: “We contribute to meeting the net zero challenge by engaging with clients and the issuers of our portfolio holdings, while taking an investment-led approach in aiming to allocate increasingly to those companies and regions that are demonstrating a commitment to real-world decarbonisation. Achieving net zero involves the whole Newton investment team, including our executive leadership, with our investment-led approach at the heart of everything we do.”
We contribute to meeting the net zero challenge by engaging with clients and the issuers of our portfolio holdings, while taking an investment-led approach in aiming to allocate increasingly to those companies and regions that are demonstrating a commitment to real-world decarbonisation. Achieving net zero involves the whole Newton investment team, including our executive leadership, with our investment-led approach at the heart of everything we do.Therese Niklasson, Global Head of Sustainable Investment
Three core points
As an active manager, Newton’s focus in setting its targets has been to ensure it invests with purpose and aligns those targets with three core points:
- Decarbonisation must take place in the real world. Climate risk is a real-world problem, and we will not seek artificial ‘decarbonisation’ through changes to asset allocation decisions. Our investment-led focus is on regional and corporate transition plans which result in real-world decarbonisation that addresses the climate-change jeopardy faced by all stakeholders. Portfolio decarbonisation is not the same as investing for decarbonisation.
- Engagement around companies’ transition plans. This means using Newton’s role as an active manager to establish and manage a focused and effective engagement programme to ensure that companies’ plans are credible and achievable, not just scientifically robust. In Newton’s engagement activity, it will recognise that there are varying regional and industry pathways to net zero, and that neither the transition to net zero nor portfolio decarbonisation is linear in nature. Newton seeks to prioritise engagements with high-emitting companies as they will be the ones whose transition to net zero will be most difficult (but of most significance in achieving the net zero goal).
- Investment should be made in solution providers. There are myriad new investment opportunities aligned with delivering a successful energy transition. Newton already has investments in several solution providers linked to the transition.
Progress on the net zero targets will be monitored through Newton’s newly formed sustainability committee, whose membership comprises senior individuals (including executive committee members) from across the business, and will be published in its annual Task Force on Climate-Related Financial Disclosures report, in addition to other formal reporting platforms. The approach will adapt and develop over time as science, policy responses and management approaches evolve.
1 Global AUM refers to the combined assets under management of Newton Investment Management Ltd and Newton Investment Management North America LLC.
Notes to editors
About Newton Investment Management Group
“Newton Investment Management Group” is a corporate brand which refers to the following group of affiliated companies: Newton Investment Management Limited (NIM) and Newton Investment Management North America LLC (NIMNA). In the United Kingdom, NIM is authorised and regulated by the Financial Conduct Authority (‘FCA’), 12 Endeavour Square, London, E20 1JN, in the conduct of investment business. Registered in England no. 01371973. NIM and NIMNA are both registered as investment advisors with the Securities & Exchange Commission (‘SEC’) to offer investment advisory services in the United States. NIM and NIMNA’s investment businesses in the United States is described in Form ADV, Part 1 and 2, which can be obtained from the SEC.gov website or obtained upon request. Both firms are indirect subsidiaries of The Bank of New York Mellon Corporation (“BNY Mellon”).
Newton Investment Management Group provides discretionary and non-discretionary investment advice to institutional clients, including US and global pension funds, sovereign wealth funds, central banks, endowments, foundations, insurance companies, registered mutual funds, other pooled investment vehicles and other institutions. Its current office locations include London, Boston, New York and San Francisco.
Personnel of certain BNY Mellon affiliates may act as: (i) registered representatives of BNY Mellon Securities Corporation (in its capacity as a registered broker-dealer) to offer securities, (ii) officers of the Bank of New York Mellon (a New York chartered bank) to offer bank-maintained collective investment funds and (iii) associated persons of BNYMSC (in its capacity as a registered investment adviser) to offer separately managed accounts managed by BNY Mellon Investment Management firms.
Assets under management estimated as $130.9bn USD / £99.4bn GBP as at 31 March 2022, including combined assets managed by Newton Investment Management Limited and Newton Investment Management North America LLC. In addition, AUM for Newton Investment Management Group includes assets of bank-maintained collective investment funds for which NIM or NIMNA has been appointed sub-advisor, where Newton Investment Management Group personnel act as dual officers of affiliated companies and assets of wrap fee account(s) for which Newton Investment Management Group provides sub-advisory services to the primary manager of the wrap program.
News and other information about Newton is available at newton-stag-01.aws.hmn.md and via Twitter: @NewtonIM
Unless otherwise specified herein, all information sources by BNY Mellon as of 8 June 2022. This press release is qualified for issuance in the UK and Europe and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized.
In the UK, this press release is issued by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA) to members of the financial press and media and the information contained herein should not be construed as investment advice. Registered office of BNYMIM EMEA: BNY Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Conduct Authority. A BNY Mellon Company.