ClearBridge targets active ESG engagement

Yasmine Raso

Senior Journalist, Financial Newswire

31 May 2023

ClearBridge Investments has released the sixth edition of its annual stewardship report, announcing its renewed focus on expanding its role to tackle pressing sustainability challenges.

The report, titled “Creating Sustainable Value Through Active ESG Integration”¸ details the fund manager’s environmental, social and governance (ESG) framework that is aligned with the United Nation’s (UN’s) Sustainable Development Goals (SDGs).

“While we believe the SDGs are more thematic than company specific, they help demonstrate how our research framework of sector- and company-specific ESG considerations aligns with broader societal goals and the impact that investing within this framework can have,” the report said.

“Many of the themes targeted by ClearBridge ESG analysis and company engagements — like climate change, sustainable food or natural resource efficiency — correspond to the SDGs in a variety of ways.”

The report also reaffirmed ClearBridge’s commitment to the Net Zero Asset Managers initiative (NZAM) and its goals of ensuring at least two-thirds of current in-scope assets are net zero aligned or subject to engagement by 2030; aligning 100 per cent of the firm’s assets with the pathway to net zero by 2040; and achieving net zero emissions across all portfolios by 2050.

The Franklin Templeton fund manager also detailed its process in measuring each portfolio company’s emissions trajectory as part of determining the portfolio’s climate performance and its alignment with the recognised net zero pathway. The process also involves identifying whether a company has introduced science-based emission reduction targets as a “clearly defined pathway” to best position the company for decarbonisation and prevent further climate change impacts.

“NZAM is an important step forward for the asset management industry because it is the first initiative of its kind to lay the foundation for hundreds of asset managers to set net-zero targets, and it provides verification of each manager’s approach as well as a mechanism for tracking progress over time,” Ben Buckley, CFA Portfolio Analyst, Sustainability Leaders Strategy and Anna Cala, Senior ESG Associate from ClearBridge wrote in the report.

“The focus of our approach to net zero is high-touch engagement with portfolio companies on their decarbonisation strategies. As long-term investors, we want to ensure the companies we are investing in are prepared for the changes that a decarbonising economy and a changing climate will bring to markets around the world.”