Eastspring Investments: Responsible Investment Report 2022
64
ONE
WACI Trend
tCO 2 e/$m
WACI Coverage
tCO 2 e/$m
% coverage
Drove a 43% decline in Prudential’s WACI to 219 tCO 2 e/$m in 2022 using a 2019 baseline. Eastspring continues to drive the decarbonisation of Prudential’s investment portfolio 5 . In 2022, there is a 43% decline in the WACI of the investment portfolio against its 2019 baseline. This effectively means Prudential’s target of a 25% reduction in the carbon emissions intensity of their investment portfolio has been met and it will continue to be monitored towards the YE2024 deadline. For more information on the initiatives that we drive for one of our largest clients, please refer to page 75.
400
80
350
75
70
300
250
65
200
60
YE2019
YE2021
YE2022
TWO
THREE
Ultimately, changes in the carbon emissions intensity of the underlying businesses in which we invest will change the WACI of our portfolios. As such, it was imperative to include, within our portfolio decarbonisation strategy, a focus on thematic engagement that is helmed by the Sustainability team and performed in consultation with investment teams across the group. In our capacity of active owners, we encourage companies to set long-term decarbonisation targets, aligned at a minimum to their country’s NDCs, so that we can leverage on the wider industry alignment to net-zero goals. We have assessed 86 holdings responsible for 65% of the absolute emissions in Prudential’s investment portfolio. This translated into 72 companies as of June 2021. We completed the first year of engagement with these companies and have embarked on the second year of this engagement. For more information on how we conduct central engagement, please refer to page 31.
Completed annual Central Engagement Programme for Climate Change and Decarbonisation totaling 140 engagements with 72 companies. Eastspring recognises that one of the most meaningful aspects of the net- zero conversation is the global energy transition towards more sustainable alternatives. With a significant proportion of our assets in Asia and the Emerging Markets, we are uniquely positioned to leverage on our in-depth knowledge of this region’s companies and their business environment to encourage business and management practices that support sustainable development.
Implemented WACI budgets in select passive strategies. As one of the key strategies we employed this year, we implemented WACI budgets by carefully adjusting existing passive quantitative strategies to reduce WACI relative to the benchmark. We believe this limits the level of unrewarded climate risk in the portfolio. This highlights our commitment to reducing the carbon emissions intensity of our funds whilst maintaining a focus on performance. This initiative is helmed by our Quantitative Strategies team. For more information on our quantitative capabilities, please refer to page 55.
5 Prudential investment portfolio (“investment portfolio”) includes both listed equities and corporate bonds, whilst excluding assets held by joint venture businesses and assets in unit-linked funds as we do not have full authority to change the investment strategies of these.
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