Video: How does ESG work in times of inflation? – Pensions

War in Europe, record energy prices and the return of inflation are just some of the factors contributing to market volatility today.

Despite this, our multi-stakeholder approach and long-term outlook help us minimize the impact of these factors and macro undercurrents.

As sustainable investors, we are looking for companies that exhibit “corporate karma” because these are the companies that seek not only to survive but to thrive in times of macro uncertainty.

One area currently under short-term pressure is the recent strength of energy companies following the surge in oil and gas prices following the Russian invasion of Ukraine. We conclude from recent events that the high and volatile fuel prices we have seen only serve to increase the urgency of countries and governments to achieve their full climate transition and focus companies on achieving their net zero-carbon commitments.

Schroders is a signatory to the Climate Action 100+ and Net Zero Asset Management initiative and was one of the first financial institutions to be a committed member of the Science Based Target (SBTi. We know first hand what it takes to make a commitment to climate and work towards a climate goal.

As active owners, we have implemented ambitious engagement plans targeting over 500 companies across a wide range of industries to encourage companies to commit to climate goals, implement transition plans, and enable us to measure and track performance as they progress. .

Where are we currently interacting with companies?

One company we have been working with since 2019 is Recruit, a Japanese recruiting firm best known for its Glassdoor and Indeed websites. We initially successfully engaged with this company on governance, specifically gender diversity at the board and executive level.

Driven by that optimism, we re-engaged with the company on climate transition plans and were very pleased to hear that the company announced zero net commitments in 2021.

In a recent phone call with the company, we learned that they have already formulated short and medium term ambitions in line with a 1.5 degree Science Based Target initiative. Importantly, these were related to management compensation. The focus is now on how to incorporate and minimize indirect Scope 3 emissions, which mainly come from temporary staff commuting.

Measuring and managing Scope 3 emissions is no easy task. They have launched initiatives on the promotion of remote working and ecological transport, not only for their own staff, but also for the staff they are recruiting for their customers.

We will continue our dialogue with the company, especially on environmental disclosure, as well as new initiatives on transparency on Scope 3 emissions, and will seek to share best practices among companies facing similar climate challenges.

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