The Liontrust sustainable investment team has set a challenge for the companies it holds in its equity and bond funds to ensure that they reduce their absolute carbon emissions to zero.
Companies will be asked to explain before the end of 2020 the strategy they have in place to decarbonise their businesses to limit global warming to 1.5 degrees.
The ‘One and a half degree transition challenge’ posed by Liontrust means that the more than 200 companies held across the team’s funds have until the end of this year to provide a plan and the time period over which this will be achieved.
It will also ask for evidence that companies have started the process of reducing carbon emissions before the end of this year.
Harriet Parker, investment manager on the Liontrust sustainable investment team, said: “Companies that do not develop and enact a rapid decarbonisation of their business activities will face rising costs and risk to their future success. They need to start the transition now.”
She added: “We are not being prescriptive on how companies achieve zero carbon emissions, although we expect it to include energy efficient products, low carbon energy, renewables and improving building efficiencies.”
The Liontrust sustainable investment team will report on the companies’ progression towards ultra-low carbon emissions in preparation for COP26, which starts in Glasgow on 9 November 2020.
Investment manager Mike Appleby added: “Given the scale of the challenge, all companies will need to play their part, even those in parts of the economy that are not the most carbon intensive.”
According to Liontrust, the team’s funds are already up to 77 per cent less carbon intensive than their respective indices and have up to 30 per cent invested in companies accelerating the shift to a lower carbon economy.