Are you 100% faithful to Net Zero?

Everyone in my office knows I’m a big fan of The Traitors on BBC. If you haven’t watched it, stop reading right now and watch all three seasons and come back to me. It won’t take long – you’ll inhale it. Just make sure there aren’t any birthdays or work deadlines that could trip you up. It’s compelling stuff.

For those of you who haven’t seen it and can’t risk another televisual addiction, 22 people hole up in a grand old pile in the Highlands. Among the ‘Faithfuls’ are three ‘Traitors’ who try to sabotage the group’s attempts to complete challenges and banish one of the group each night. The Faithfuls must root out the Traitors and vote them all out to get a share of the prize money. It’s a strategic game where – for the Faithfuls – trust, honesty and communication are key. 

One of Rathbones Asset Management’s engagement priorities this year is engaging about Net Zero with some of our largest holdings that don’t have a Science-Based Targets Initiatives (SBTi) target for their emissions. The SBTi has developed standards and tools to help companies reduce emissions in line with a 2050 Net Zero target in line with the Paris Agreement.

Just like the Faithfuls, this involves building trust and ensuring good communication between us and our holdings. We need to set out our expectations ahead of meeting with companies and communicating what next steps we’re keen to see from them.

Although it’s not quite that simple, because every investor will be measuring companies’ progress towards Net Zero in different ways. Whether that’s using the Net Zero Investment Framework (NZIF), Climate Action 100+ Net Zero Company Benchmark or SBTi – just to name a few. We think it’s important to use these frameworks as a base for a dialogue with them, helping us understand our holdings’ climate ambitions and what they’ve done to improve since we last spoke. But also helping them understand our expectations as well.

In The Traitors there are challenges, making the game less straightforward for the Faithful. Everyone appears to be working together, but in reality they can have very different motives. Similarly, we face challenges with climate ambitions, especially with recent political shifts and a louder anti-ESG (environmental, social and governance issues) rhetoric playing out. 

I don’t know quite how this will play out with companies' climate ambitions, as global warming still exists and it will increase costs for businesses and society if it’s not mitigated. But new political winds may make motivations differ from company to company. Our parent, Rathbones Group, has a 2050 Net Zero commitment so we need to understand why some of our holdings do not currently have targets and ask those that do how they are implementing their Net Zero ambitions while we monitor their progress both in the short term and also in terms of their 2030 and 2050 milestones. I will be interested to hear the consensus from businesses about whether the political narrative around Net Zero changes anything for them.

Unlike in The Traitors, where the group gathers around a roundtable to ‘banish’ (hopefully) a Traitor each night, our engagement is a chance for everyone to speak, share their views and present evidence. One (of many things) that sets us aside from The Traitors is that we don’t want to ‘banish’ any of our holdings in an ideal scenario; we want to keep them around the table to discuss and encourage them further along the Net Zero journey. It’s just a matter of the next sensible step for them to take. We want to use an evidence-based approach (unlike they do on the TV show) to understand how they are progressing towards Net Zero as well as understanding what challenges they face in the path to get there. 

Sadly, The Traitors Season Three is over now, so I have some more time back in my evening. Plenty of time for me to rest up ahead of another day of pushing our investments to be the best they can be.