Flashing green, amber and red – our efforts to tackle climate change

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Personal Investing

14 October 2020

The Investment Stewardship team outlines the key features of its 2020 Climate Impact  Pledge.

What is the background to our Climate Impact Pledge?

The world in which we live is changing. From California to Brazil, wildfires have devastated entire regions. Deforestation continues apace. We are by no means alone in believing that companies and investors alike have a key role to play in tackling the climate emergency.

If climate change goes unchecked, we believe global warming will have damaging consequences for our health, livelihoods, and economic growth. This is why governments from around the world have agreed – under the 2015 Paris Accord – to work to limit global warming to no more than 1.5 degrees above the pre-industrial age. Aiming to achieve net zero emissions globally by 2050, we believe, is the safest way to meet this goal.

How does the Climate Impact Pledge work?

We focus our attention on what, we believe, are companies in ‘climate-critical’ sectors. In a nutshell, we assess the commitment of companies to climate change and encourage them to do more. For those companies who repeatedly fail to address their climate responsibilities, we take action against them. We give each company a score, displayed as a traffic light system. By assigning each company its own score we know which companies are actively committed to working towards reducing carbon emissions … and which are not.

Our traffic light scoring system.

Actively working with around 1,000 companies to bring about reduced carbon


What does this mean for you?

As a firm, we believe we have a responsibility to consider the impact which the companies in which you may be investing have on the environment and wider society. We expect the companies in which we invest on your behalf to drive sustainability forward, in other words to help maintain and protect the environment, as well as to treat their employees and suppliers fairly.

Remember, the value of any investment is not guaranteed. The value of investments and any income received from can go down as well as up and you may not get back as much as you had originally invested.

Risk warning

Please remember the value of your investment and any income from it may fall as well as rise and is not guaranteed. You may get back less than you invest.

Please note the information, data and any references in this article were accurate at the time of writing. Please check the date of the content if you’re looking for up to date investment commentary or tax-year related information.