Episode 64


Anna on the Net Zero Asset Managers initiative

Anna Murray, Managing Director, Global Head of ESG at SLC Management, discusses SLC Fixed Income’s commitment to the Net Zero Asset Managers initiative and how we’ll work together with our clients on their decarbonization goals.

Steve Peacher: Hi everybody. Thanks for dialing in to this episode of “Three in Five,” and once again for the second time I’m joined by Anna Murray, who's a managing director and global head of ESG for us at SLC Management. So, Anna, thanks for taking some time today.

Anna Murray: Great to be here Steve.

Steve Peacher: We, of course recently announced at SLC Management that our investment grade fixed income business, SLC Fixed Income, is joining the Net Zero Asset Managers initiative, which is a big deal. So can you tell the audience, you know, what the Net Zero Asset Manager's initiative is all about, and why we joined it?

Anna Murray: Absolutely. So, the Net Zero Asset Managers initiative, or commonly known as NZAM, is a financial industry initiative for asset managers to reduce the emissions of their portfolios to net zero greenhouse gas emissions by 2050, if that's not a mouthful. So net zero by 2050 is what science tells us is needed to limit global warming to 1.5 degrees and avoid the really damaging impacts of climate change. For context, the world is already at roughly 1.1 degrees warming, and we're already seeing devastating impacts such as extreme drought in southwest U.S., extreme heatwaves in Europe, et cetera. So of note NZAM already has more than two hundred and seventy asset managers around the world signed on. Now that represents well over $60 trillion worth of global AUM. NZAM is focused on financed emissions, which are the emissions that we are responsible for through our investments in products. Now net zero is an enormous challenge and governments can't reach these goals on their own. Instead, the financial sector has a critical role to play, so we joined NZAM because we believe that working proactively with our clients and borrowers towards an net zero target is a critical step in support of the transition towards a low-carbon economy. It will give us an edge in investment decision making, drive better performance and achieve a better environment for people everywhere.

Steve Peacher: One of the commitments that goes along with joining NZAM is that you're committing to work with our clients on their decarbonization goals. What will this look like in practice? You know what kind of information what we need to give them on their portfolios? What kind of support will they need from us so that our clients can reach their decarbonization and climate goals?

Anna Murray: Right. The NZAM commitment involves a number of actions. So, this is really about taking a comprehensive approach while recognizing there are limitations in what we as an asset manager can do, particularly in fixed income. So the first step is we'll be setting interim finance emissions targets for 2030. To get there will require us to do a number of things, for example, engaging with investees, being strategic in who we focus on and supporting them in the transition to a low-carbon economy. We're working to create new products that we can offer clients who want to invest in climate positive and low-carbon solutions. And we're also actively working on enhancing our data and reporting abilities to give clients better insights into the climate performance of their investments. It's really important that the focus is not just on reducing portfolio emissions, but dramatically scaling up climate solutions, expanding renewable energy, and developing new technologies. And we see big investment opportunities here. And above all, the focus needs to be on real world impact. For example, if we sell off a holding and it just gets bought by someone else, well, that doesn't really move the dial on reducing emissions. All of this is in the context of meeting our fiduciary duty to clients, of course.

Steve Peacher: All things ESG are moving at a kind of warp speed these days, so the regulatory environment is changing. Client demands are changing rapidly and increasing, certainly. And I think obviously asset managers like SLC Management have a big role to play in terms of creating the incentives through capital allocation as we transition to a lower carbon economy. So could you talk about some of the steps that SLC Fixed Income is taking from a data management and transparency perspective as part of you know, this whole effort?

Anna Murray: Absolutely. Hands down, data is one of the biggest challenges out there in this space. So for some assets, like investment grade bonds, data exists in terms of the amount and sources of GHG emissions. But for other assets like mortgages for the companies it's much more difficult, and you have to use proxies and make assumptions. This year we joined the Partnership for Carbon Accounting Financials or PCAF, which is an industry collaboration in the financial space around climate data and methodologies. And through PCAF we're working with our peers to sort through some of these really complex data issues. So we're putting considerable time and effort into expanding our in-house data and research capabilities which will allow us to further track the portfolio emissions of different strategies for clients and measure how we're progressing towards net zero. Delivering high value for our clients in terms of climate insights and reporting is a fundamental priority for us. Part of the NZAM commitment is really expanding the information and tools we can offer to clients to help them make informed decisions.

Steve Peacher: You know we're putting so much attention and resources at SLC and more broadly at Sun Life into what we can do as an investing institution, as a financial institution, to meet sustainability goals, to work with our clients, but also there's a lot that people can do individually. And so given that this is at the center of your professional life, I’m sure it also impacts, you know, how you and your family go about your daily activities given your personal obsession with sustainability. So, I thought it would be great to ask you, do you have any recommendations for those listening about what the kind of things they can do in their own lives if they want to improve their own sustainability profile as an individual?

Anna Murray: Absolutely. And this is probably my favorite question. So, simply put what's most important in our family and with our kids is to get back to nature. And in doing so we work towards truly enhancing their knowledge of and appreciation for biodiversity. So I know as a child the time I spent outdoors in the mountains, forest, or by the ocean, truly impacted my understanding and ultimate commitment to protect resources that we have. So, we do the same with our kids and try to make sure they fully comprehend how ecosystems work, the critical importance of preserving the natural habitat around us, and how we each hold responsibility in doing so.

Steve Peacher: Well, thanks, Anna. You know it's interesting because I think that so much of this is about a generational change, you're talking about the experience you had as a child. And now your kids have. And I think of my own children and how they are so much more tuned in to environmental issues than I was when I was their age. And I think that's going to make a huge difference over the coming years and decades in terms of the policy, because that's all going to filter into how institutions and governments think, as well as individuals. So, thanks everybody for listening to this episode of “Three in Five,” and Anna, thanks for joining us again.

Anna Murray: Thanks, Steve.



This podcast is intended for institutional investors. The information in this podcast is not intended to provide specific financial, tax, investment, insurance, legal or accounting advice and should not be relied upon and does not constitute a specific offer to buy and/or sell securities, insurance or investment services. Investors should consult with their professional advisors before acting upon any information contained in this podcast. This podcast may present materials or statements which reflect expectations or forecasts of future events. Such forward-looking statements are speculative in nature and may be subject to risks, uncertainties and assumptions and actual results which could differ significantly from the statements. As such, do not place undue reliance upon such forward-looking statements. All opinions and commentary are subject to change without notice and are provided in good faith without legal responsibility.