Cardano has published its climate plan, setting out its journey to reaching net-zero emissions in its investment portfolios by 2050.
Its default position the road to net zero will apply to all its fiduciary management mandates and liability-driven investments going forward.
Cardano also said it supported global emissions reduction of 50 per cent by 2030, with baseline year 2019, which informs its asset-class decarbonisation targets.
It has committed to measuring portfolios’ carbon footprints, greenhouse gas emissions and contributions to climate change, and will measure portfolio-financed emissions per pound invested as the primary means of setting targets and decarbonising portfolios’ carbon footprints over time.
Further investment in green bonds has also been promised, alongside investing in low-carbon equity, with a preference to engage rather than divest, and collaborating with the industry to contribute to a more sustainable financial system.
Additionally, Cardano welcomed the Financial Conduct Authority’s (FCA) consultation on proposals to introduce Talk Force on Climate-related Financial Disclosures’ (TCFD) requirements for asset managers, life insurers, and FCA-regulated pension providers.
Cardano group head of sustainability, Will Martindale, commented: “We welcome the FCA’s proposed climate-related disclosure rules as these will improve efficiency in metrics across the intermediation chain, reward first movers, and most importantly raise minimum standards.
“The climate crisis is a collective action problem. Ultimately, we need to move the market as-a-whole to protect savers from the environmental and financial consequences of climate change. TCFD is the right starting point. Introducing these regulations will help expedite methodology development, particularly around hard-to-reach asset classes, such as private equity, infrastructure, and derivatives. From October 2021, the UK’s largest pension funds will be required to prepare TCFD reports. It’s right that the companies in which they invest – and the asset managers through which they invest – are also required to do so.”
However, Martindale stated that the firm saw benefits in introducing mandatory, but non-binding, target setting, rather than the comply-or-explain approach introduced by the consultation.
He continued: “While we understand the complexities of target setting, it shouldn’t stop the industry from trying. We need to see the whole industry adopt target setting on decarbonisation, not just pension funds. We believe the FCA should also require disclosure on climate-related stewardship as a core part of TCFD. There have been some successes here such as Climate Action 100+, but we need to see more industry collaboration on stewardship goals to send clear messages to the companies in which we invest.
“At Cardano, we’re committed to reducing our investment portfolios to net-zero carbon emissions by 2050. To achieve this, we will continue to collaborate with the industry to contribute to a more sustainable financial system. By coalescing around common themes and methodologies, collaboration allows for a faster, smoother transition. Cardano is a member and supporter of several sustainability-focused organisations, including the PRI, IIGCC, PCAF and the Net Zero Asset Managers Initiative and Climate Action 100+.”