Fulcrum Asset Management
Fulcrum Asset Management is an independent investment manager with a global client base of institutions, wealth managers and private investors. Fulcrum joined the Net Zero Asset Managers Initiative in January 2022 and made its Initial Target Disclosure in June 2023.
Percentage of assets covered by the Net Zero Asset Managers Commitment Statement
7.5% of total AUM (USD $0.5 billion)
Information on interim target(s) covering the proportion of assets to be managed in line with net zero
a) ‘Implied temperature rise’ below 2°C. No single stock selected for the Fulcrum Climate Change strategy can have a higher temperature, with the strategy having an average temperature of 1.5°C, in line with the Paris goals. A significant proportion of our equities, as at May 2023, are invested in (or replicate the allocations of) this strategy. As per the Net Zero Investment Framework, we consider c. 4% of our firm AUM to be ‘climate-aligned’ as a result of this allocation.
b) -50% reduction in weighted average carbon intensity. This target will apply to funds in our Fulcrum Alternatives capability, where alignment methodologies are less established. We consider these funds to fall in the ‘aligning’ category of the Framework.
GHG scopes included:
Our portfolio monitoring system for equities includes absolute and intensity-based metrics across scopes 1, 2, and 3. We use an emissions database, provided by Sustainalytics, covering c. 12,000 stocks.
Our temperature calculations are primarily based on data from S&P Global Trucost, which analyses the compatibility between companies’ past and future potential emissions scenarios for c. 14,000 stocks. Scope 1 and 2 emissions are the main measure of alignment for most companies, with Scope 3 included in certain sectors (e.g. automakers). We are currently revising our methodology to incorporate additional data providers, as well as our internal modelling of companies’ emissions and compatibility with global carbon budgets.
Carbon budgets set by the IPCC (in particular, the 1.5°C no overshoot scenario) are used by our main alignment data provider, S&P Global Trucost in addition to IEA and IPCC scenarios for higher levels of temperature.
Proportion of AUM committed:
Given our range of investment capabilities – which invests in a variety of instruments, taking both short and long positions over different time horizons – we have decided that our long-term, long-only holdings of corporate securities (primarily equities) represent the most natural starting point for portfolio alignment. As at Q1 2023, a significant proportion of such holdings are allocated to climate-aligned securities (defined as having an ‘implied temperature rise’ of below 2 °C). At the same time, a significant part of Fulcrum’s assets are invested in asset classes or instruments (such as derivatives, or commodities) where net-zero alignment methodologies do not currently exist; we participate in several industry working groups to help advance the conversation on portfolio alignment and asset classes.
Policy on coal and other fossil fuel investments:
We have excluded companies primarily involved in – and planning new projects for the extraction of – thermal coal mining and oil sands from existing strategies managed in line with net-zero such as our Climate Change strategy. Going forward, all the other strategies subject to the present net-zero commitment (c.7.5% of firm AUM) will apply this exclusion policy – and we will seek to expand the screening criteria over time. Data used comes from the Global Oil and Gas Exit List and the Global Coal Exit List provided by NGO Urgewald.
Stars aligning for portfolio alignment – “The majority of our long-term directional equities will only be invested in companies aligned with the goals of the Paris Agreement.” (Note: our ‘directional’ equity allocation – mentioned above represents equities held with a view to long-term growth, as opposed to more shorter-term trading).
– Fulcrum’s stewardship report, detailing our engagement with high-emitting companies.
– An engagement update, detailing votes against companies with insufficient climate targets