Feature | ESG
linking their success to the remuneration packages of its executives. Energy company Equinor is another example. It agreed, after speaking with UBS, HSBC and $80bn (£62.8bn) Norwegian asset manager Store- brand, to set climate-related targets beyond 2030 and strengthen the link between exec- utive pay and those goals.
MISSION: IMPOSSIBLE
There has been criticism that this is too far away and that the deadline should be brought forward, but it is too ambitious to wipe out carbon emissions entirely. An industry that does not produce a carbon footprint is rare. Every company has a value chain where emissions are released. For example, building wind farms or electric cars involve getting the raw materials out of the ground.
If you chose to exclude fossil fuel companies
then there is an opportunity cost. Mette Charles, Aon
At a government level, the UK is working on formulating a plan to reduce its impact on the climate. In May, a Committee on Cli- mate Change, a panel advising the govern- ment, recommended that the country elim- inate all greenhouse emissions by 2050.
“When it comes to the Just Transition [a framework seeking to ensure a seamless move to a low carbon economy], it’s impor- tant to remember that while renewable energies are a huge part of the solution, the minerals that go into them can cause envi-
ronmental and social damage,” Barron says. She adds that to improve the chances of carbon neutrality there is a need for better data, reporting, enforcement and aware- ness along lifecycles and supply chains. “It will also probably require offsetting,” she adds. Sasarean disagrees saying that it is “unrea- sonable” to have a completely carbon neu- tral portfolio. “Either way you look at it there is an impact,” she adds. “Renewable energy companies use lifecycle compo- nents and although you are not using fossil fuels you are using electricity from the grid.” So, it appears that asset owners will have to accept that they will have some carbon in their port- folio and that reducing rather than eradicat- ing it should be the goal. Handing less tax-payers’ money to oil com- panies could help achieve this. “Roughly speaking, about three times more subsidies annually go to the fossil fuel industry com-
28 | portfolio institutional | May–June 2019 | issue 84
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