Federated Hermes Limited
Federated Hermes Limited offers equity, fixed income, real estate, private equity and debt strategies along with a leading stewardship business, EOS. Federated Hermes Limited joined the Net Zero Asset Managers Initiative in July 2021 and made its Initial Target Disclosure in November 2022.
Percentage of assets covered by the Net Zero Asset Managers Commitment Statement
82.7% of total AUM (USD $47.7 billion)
Information on interim target(s) covering the proportion of assets to be managed in line with net zero
2022 for public markets and infrastructure and 2018 for real estate targets.
8.3% of our financed emissions in scope is aligned, 22.5% is aligning and 17.5% have committed to net zero.
13.7% of total AuM in scope is aligned, 18.9% is aligning and 21% has committed to net zero.
80% of financed emissions will be subject to direct or collective engagement and stewardship actions by the end of 2022.
Real Estate: 16.5% of AUM have an EPC rating of B or above. 0.62% of AUM is currently net zero and 3.89% of AUM is at or below the pathway to achieve our targeted 25% reduction in energy intensity target by 2025.
We target over 25% of in scope AUM and financed emissions will be 1.5°C aligned by 2025.
Real estate: 25% reduction in energy intensity by 2025.
Infrastructure: 100% Paris-alignment of assets by 2025.
We target over 90% of financed emissions will be subject to direct or collective engagement and stewardship actions by 2025. To achieve this, in-depth engagement will be focused on the top emitters. We will prioritise the following sectors forest, land and agriculture, buildings, iron and steel, cement, chemicals, transport, oil and gas, power generation and banks. We will also seek to raise awareness regarding our climate expectations with all investee companies where climate change is considered a material risk and no credible target has been set by the company.
We target over 50% of in scope AUM and financed emissions will be 1.5°C aligned by 2027.
We target over 80% of in scope AUM and financed emissions will be 1.5°C aligned by 2030.
Real estate: 40% reduction in energy intensity by 2030,
Real estate: 66% reduction in energy intensity by 2035.
Net Zero in terms of development and operations, and real estate debt by 2035.
GHG scopes included:
All of our targets cover Scopes 1 and 2 (and where possible, Scope 3, where it is material to the sector or accounts for 40% or more of total emissions). 94% of our public markets AUM has emissions data for Scopes 1, 2 and 3. Real estate has 100% coverage of Scope 3 and Infrastructure has 67% coverage of Scope 3. If a company does not disclose this information, it is estimated or modelled where possible.
Available authoritative 1.5°C aligned scenarios with limited or no overshoot (based on TPI and SBTi sector pathways where available, which are themselves derived from IEA and IPCC scenarios).
Proportion of AUM committed:
Private equity, direct lending and sovereign debt are currently out of scope. For these asset classes, we recognise that methodological best practices are still emerging and that data coverage and quality need further improvement to evaluate alignment with the Paris goals. We will look to address this over time through ongoing industry and issuer engagement and our active involvement in numerous climate disclosure related initiatives. In public equity and fixed income, there are certain instruments such as FX, cash, indices, ABS, CLOs, CDOs issued by companies for which we do not have climate data and are therefore currently out of scope. We will strive to find ways to use our entire AUM and wider advocacy efforts to support faster decarbonisation.
Policy on coal and other fossil fuel investments:
No. Fund managers are required to report to clients using Transparency and Accountability (T&A) Framework on companies with thermal coal, tar sands, shale oil and fracking activities. Economic risk from other controversial activities to be considered using the firm’s and the investment strategy’s specific ESG integration approach, which will be updated this year
Our approach is based on the Net Zero Investment Framework and has been reviewed by several external third parties: Exeter’s Global Systems Institute, Chronos and another leading academic institution to ensure it is sufficiently rigorous.