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Stewardship Matters - Edition 3: Quantifying decarbonisation

Our regular update of Martin Currie’s work in the stewardship and ESG space and our insights into future ESG trends. EDITION 3 focuses on quantifying the impact and opportunities of decarbonisation.

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Date published
13 Jul 2021
Tag
David Sheasby Head of Stewardship and ESG
John Gilmore Stewardship & ESG Specialist

Welcome to the third edition of STEWARDSHIP MATTERS – our regular publication where our investment teams in Edinburgh, Singapore and Melbourne share their sectoral and regional Stewardship and ESG insights into future ESG trends, updates on the ongoing development of our ESG toolkit, and outcomes of the extensive active ownership activities that we are undertaking on behalf of clients.

This edition provides a review of Stewardship and ESG activity over the first half of 2021, and specifically focuses on a key topic of interest highlighted by our clients - how we are working towards quantifying the impact and opportunities of decarbonisation.

Key highlights

  • Decarbonisation is a journey with significant challenges. For us as investors, the key is about how we can work in partnership with our clients and our investee companies to facilitate this journey.
  • At Martin Currie, we are increasingly using Scope 1, 2 and 3 carbon emissions to frame our ESG analysis and engagement. In our efforts to achieve best-in-class ESG outcomes at the companies we invest in, we have continued to develop new initiatives in carbon measurement.
  • Our investment teams discuss in detail how our proprietary Carbon Value-at-Risk (VaR) tool is supporting investment decision making and risk management, as well as how we work with clients on their carbon requirements.
  • Using carbon measurement as a lens, our investment teams also explore the potential risks and opportunities from decarbonisation, and how we are using Scope 1, 2 and 3 carbon emissions to frame our engagements with investee companies.
  • We also touch on our commitment to becoming part of the decarbonisation solution through initiatives such as the Net Zero Asset Managers Initiative and targets to become net zero as a business.
  • Finally, despite the ongoing physical barriers imposed by the COVID-19, our investment teams have continued to participate in extensive engagement and voting activities in the first half of 2021, many of which have a climate change focus.

Source: Martin Currie. Engagement activity is for the period 1 January 2021 – 30 June 2021.

We see that COP26, taking place in Glasgow later this year, as a great opportunity for the world to refocus attention on achieving the goals of the Paris Agreement after attention was diverted by the COVID-19 response during 2020.

Looking forward, we expect to see increasing detail from both countries and corporates on moving from decarbonisation policy to specific action. This has been mirrored in the detail of what we are integrating into our own investment process and actions as a business.

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In our efforts to achieve best-in-class ESG outcomes at the companies we invest in, we have continued to develop new initiatives in carbon measurement.


Regulatory information and risk warnings

This information is issued and approved by Martin Currie Investment Management Limited (‘MCIM’), authorised and regulated by the Financial Conduct Authority. It does not constitute investment advice. Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested.

The information contained in this document has been compiled with considerable care to ensure its accuracy. However, no representation or warranty, express or implied, is made to its accuracy or completeness. Martin Currie has procured any research or analysis contained in this document for its own use. It is provided to you only incidentally and any opinions expressed are subject to change without notice.

The document does not form the basis of, nor should it be relied upon in connection with, any subsequent contract or agreement. It does not constitute, and may not be used for the purpose of, an offer or invitation to subscribe for or otherwise acquire shares in any of the products mentioned.

Past performance is not a guide to future returns.

The views expressed are opinions of the portfolio managers as of the date of this document and are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. These opinions are not intended to be a forecast of future events, research, a guarantee of future results or investment advice.

Please note the information within this report has been produced internally using unaudited data and has not been independently verified. Whilst every effort has been made to ensure its accuracy, no guarantee can be given.

The information provided should not be considered a recommendation to purchase or sell any particular strategy/fund/security. It should not be assumed that any of the security transactions discussed here were or will prove to be profitable.

The analysis of Environmental, Social and Governance (ESG) factors forms an important part of the investment process and helps inform investment decisions. The strategy/ies do not necessarily target particular sustainability outcomes.