St James’s Place Wealth Management (SJP) has published its carbon emissions report for Q1 2020 on nine of its portfolios and found that eight of those have much lower carbon emissions than the benchmark, as measured by MSCI
Within the report, the group looked at its Defensive, Conservative, Balanced, Managed Funds, Strategic Growth, Adventurous, Immediate Income, Balanced Income and Deferred Income portfolios.
Of those, only the Managed Funds Portfolio had a 5% higher carbon intensity than its benchmark, weighted by asset class. The sectors contributing the most to this were utilities, materials & energy.
The group said: “This is currently being monitored and fund managers within the portfolio are being engaged with who are significantly contributing to the carbon footprint. We expect the carbon footprint to come down over time.”
The other eight portfolios all had lower carbon intensity than the benchmark; in fact, Strategic Growth, Adventurous and Deferred Income were around 50% less carbon intensive than their respective benchmarks.
Robert Gardner, investment director, commented: “We believe what gets measured, gets managed. Reporting the carbon footprint of our SJP Portfolios allows us to identify opportunities for change.
“And this is just the beginning. We’ll continue aligning our SJP Portfolios with targets based on scientific developments, with the ambition of delivering you greater insight into your investments.”
However, ESG Clarity noted the figures reported are based on incomplete data coverage, meaning that not all companies within the portfolios report their carbon emissions or have a reliable proxy. For some portfolios, only half of the companies have appropriate reporting, with 90% being the highest data coverage (on the Adventurous portfolio).
SJP receives its data from MSCI, which is working to improve its own coverage and reporting standards across the globe. Recently, the data provider acquired carbon emissions specialist Carbon Delta as part of this effort.
Additionally, SJP points to incoming regulation and initiatives, such as the Carbon Disclosure Project and the Taskforce on Climate-related Financial Disclosures (TCFD) as drivers for improved reporting in the future.
The group said: “It is imperative that we are open with all our stakeholders and recognise that we are at an early stage in our journey towards greater disclosure. We will continue to work with our fund managers to ensure we promote and influence the consideration of climate risks within their investment process.
“St. James’s Place does not mandate a specific intensity target for our portfolios or funds, instead we actively monitor this metric. The team will engage with managers if there has been a substantial increase in carbon intensity and this will typically involve a stock specific case study on a firm which has particularly high emissions.”
The group added carbon footprint reporting is just one part of a “much wider monitoring and engagement programme” which takes into account environmental, social and governance risks within all its portfolios.
“Carbon footprint reporting is a valuable first measure of how a client’s investment portfolios are impacting the planet; however, it is far from a perfect measure,” the report said.
“Responsible investing is an ever-growing field with many factors which need to be considered. Companies which currently have relatively high carbon footprints may have explicit targets in place to reduce their emissions over the next several years.”
In an effort to incorporate responsible investing further, as of this year 100% of SJP’s fund managers have agreed to become signatories to the UN Principles for Responsible Investing (PRI).