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IMPORTANT INFORMATION
All data as at 31 December 2024, unless specified otherwise. This document is issued for information purposes only. It does not constitute the provision of financial, investment or other professional advice. We strongly recommend you seek independent professional advice prior to investing. The value of investments and the income derived from them may fall as well as rise. Investors may not get back the amount originally invested and may lose money. Any forward-looking statements are based on CCLA’s current opinions, expectations and projections. CCLA undertakes no obligations to update or revise these. Actual results could differ materially from those anticipated. All names, logos and brands shown in this document are the property of their respective owners and do not imply endorsement. These have been used for the purposes of this document only. CCLA Investment Management Limited (a company registered in England and Wales with company number 2183088), whose registered address is One Angel Lane, London EC4R 3AB, is authorised and regulated by the Financial Conduct Authority.
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Better environment
We view climate change as a significant threat to our planet, ecosystems and communities.
Tuscany Sunrise, HM Prison & Young Offender Institution Moorland | Courtesy of Koestler Arts
Target: sustainable development goal 13
Target: sustainable development goal 13
Take urgent action to combat climate change and its impacts.
We view climate change as a significant threat to our planet, ecosystems and communities.
Climate change has been a primary focus in our stewardship work since 2010. In 2024, we continued to focus on policy engagement, working directly with governments and with other investors to bring about more progressive climate legislation.
We also continued to focus on decarbonising the operations and supply chains of our highest-emitting investee companies, and built out our engagements on nature, biodiversity and plastics.
Climate action
Climate action
Climate change is a critical challenge for global markets, communities and the environment. Our climate engagement strategy is designed to support the transition to a decarbonised economy through real-world emissions reductions.
As stewards of our clients’ investments, we use our financial power and ownership rights to push companies forward on reducing the emissions associated with their operations and value chains. We have long supported work to limit the global temperature increase to below 1.5 °C and are committed to accelerating the transition to a net‑zero economy.
Our strategy has three components:
1
Pushing for better regulation and legislation. It is our belief that governments must create the conditions that render it economically viable for businesses to phase out damaging activities – in particular, those that contribute to climate change. For this reason, we are working with policymakers, both in the UK and overseas, towards more meaningful regulatory action. Examples include the UK and Canadian governments’ Powering Past Coal Alliance and the Transition Plan Taskforce.
2
Corporate engagement. Investors can be highly influential in encouraging companies to take steps to reduce their own environmental impacts. Our climate engagement goes back a long way and, from 2012, was instrumental in bringing the investment industry together on this topic through Aiming for A, a forerunner to Climate Action 100+. In 2024, our climate stewardship programme targeted the most carbon-intensive businesses in our portfolio. Climate considerations are also woven throughout our bespoke voting template.
3
Avoidance. We avoid investing in companies that are highly exposed to changing legislation and regulation aimed at tackling climate change. Accordingly, we do not invest directly in any companies that focus on extracting, producing, or refining coal, oil sands, oil or gas. We assess the remaining exposed industries against the goals of the Paris Agreement on climate change.
This report covers our activity and outcomes in 2024 in relation to points 1 and 2. For details of our approach to point 3, refer to our report ‘A Climate for Good Investment’.
Our climate pledge
Our climate pledge
We are a founding signatory to the Net Zero Asset Managers initiative and have committed to decarbonising our listed equity portfolios in a way that is consistent with an ambition to reach net-zero emissions by 2050 or sooner.
The global economy needs to decarbonise and given that climate change is the most important sustainability issue for many of our clients, we recognise that our portfolios need to decarbonise too.
The Paris Climate Change Agreement aims to limit global temperature rises to a level that is just 1.5 degrees Celsius above pre-industrial levels. We aim to mirror this trajectory through a gradual reduction in the carbon footprint of our equity portfolio.
To execute the necessary transition, we have created a maximum carbon footprint that decreases over time in line with the necessary trajectory to align our portfolios with a 1.5 °C warming target. This allows the flexibility to buy and sell a variety of businesses over time, as long the overall fund or portfolio carbon footprint does not breach the maximum permitted level.
We have set our decarbonisation targets through a decreasing maximum carbon footprint based on the MSCI World Index. Informed by the Intergovernmental Panel on Climate Change’s special report on the impacts of global warming of 1.5 °C and the recommendations of the UN Environment Programme, our ceiling decreases year on year, as shown in the chart below. Our decrease is consistent with the aggregate decarbonisation rate required to limit temperature rises to 1.5 °C above pre-industrial levels and remains on track in 2024.
While our portfolio of listed equity holdings performs well on climate metrics, we are aware that measures of portfolio decarbonisation can be inaccurate and should not distract from the need to decrease real-world emissions. Accordingly, we aim to meet our decarbonisation targets through work to accelerate the transition to a low carbon economy.
Net-zero target-setting
Source: IPCC, MSCI and CCLA as at 31 December 2024.
Carbon measurements
Source: MSCI ESG Manager, as at 31 December 2024.
Fund metrics relate to equity holdings only and include scope 1 and 2 emissions.