UK-based pensions and investments consultancy LCP has said asset managers must “actively” push for changes that achieve net zero targets in order to be considered for selection by its clients. In a letter sent to CEOs last month, the firm said asset managers should be “advocating for system-level changes”, including at the policy level, that increase the chances of reaching net zero greenhouse gas emissions no later than 2050. To achieve an LCP ‘buy’ rating, asset managers must also align portfolios with net zero pathways and encourage portfolio companies to “set and meet” net zero targets. The letter, sent by LCP CEO Aaron Punwani, said asset managers needed to focus on “real world emissions reductions”, by engaging with companies, leaseholders and other stakeholders, as well as seeing profitable investments in firms and assets that reduce or remove emissions. Punwani said LCP recognised that the potential for conflicts between clients’ short-term and long-term interests may “constrain” the actions that can be taken. “While we do not expect managers to meet these in full today, we do expect to see improvements in all areas over time,” he said, but added: “Simply selling off portfolio assets that are emissions heavy will only serve to kick the can down the road and won’t help real-world emission reduction.”
