LGT Capital Partners
LGT Capital Partners is an investment manager with 13 offices in Europe, Asia-Pacific, America, and the Middle East. It joined the Net Zero Asset Managers Initiative on 29 March 2021 and its initial target disclosure was published on 1 May 2022.
22% of total AUM
initially committed to be managed in line with net zero
USD $18.8 billion
currently committed to be managed in line with net zero
Information on interim target(s) covering the proportion of assets to be managed in line with net zero
Portfolio decarbonisation reference baseline
SDA – 217 gCO2 / MWh
2020 baseline year performance for the AUM committed (funds and mandates) is 40.4 tCO2e / USD mn invested
Portfolio decarbonisation reference target
SDA – 155.9 gCO2 / MWh
LGT Capital Partners sets yearly interim targets.
The target for 2022 is at 35.5 tCO2e / USD mn invested for the AUM committed. For 2030, we are aiming to reduce our baseline year emissions by 50%.
GHG scopes included:
Scope 1 and 2 are the basis for the targets. In our view, Scope 3 data coverage is not yet sufficient, but we intend to include Scope 3 over time.
Science Based Target initiative for Financial Institutions
IEA Net Zero 2050 sectoral pathways. As data providers continue to update their tools and methodologies we will follow through and further enhance the underlying analysis.
Proportion of AUM committed:
We decided to designate asset classes in scope where we have a robust greenhouse gas emission measurement framework and the ability to effect change through our investment decisions. Therefore, we included listed corporate investment instruments of our managed funds and customised mandates in asset classes such as listed equities and fixed income as well as liquid alternative strategies. This includes listed corporate assets that are part of our dedicated sustainability funds across public equities, fixed income and multi-asset solutions.
Not yet in scope are asset classes such as money market instruments, sovereign debt, insurance-linked strategies and private equity and private debt programs. For these, we recognise that methodologies are still early stage and that data coverage/ quality needs further improvements.
Since private equity investments account for a substantial portion of our AuMs, as an initial effort, we started to measure the carbon footprint through a proxy-matching approach with public market comparables. We also engaged with our investments teams and PE managers to include greenhouse gas considerations throughout the investment process. In addition, we put efforts into the improvement of coverage and quality regarding data of the underlying portfolio companies. In this context, we recently joined the ESG Data Convergence Project, which provides a standard template and guidance for GPs reporting on six standard ESG KPIs, including greenhouse gas emissions.
Policy on coal and other fossil fuel investments:
LGT Capital Partners has a firm wide coal exclusion policy that prohibits investments in thermal coal production and power generation from thermal coal. In addition, there is a very strict fossil fuel policy that applies to the firm’s dedicated sustainable funds.
Target setting: LGT Capital Partners decided to use a combination of approaches that best fit our needs. As the SDA approach is mainly applied to companies with high emitting, homogeneous business activities, we decided to also apply a valueadded approach to cover companies with lower-emitting or heterogeneous business activities. The approaches are science-based and for high-emitting industries based on the industry-specific pathways from the IEA Net Zero 2050 scenario. Therefore, our approach provides a rigorous and consistent framework how to achieve net zero emissions in the real economy.
The applied approach is similar to Trucost’s SDA-GEVA approach which is already used by many institutional investors. It supports the identification of industry leaders and laggards when it comes to decarbonisation. A key advantage of this approach is its ability to be applied across a wide variety of portfolio holdings which can be consistently aggregated to portfolio level. LGT Capital Partners takes a sciencebased approach with a combination of a sector decarbonisation approach (SDA) and a value-added approach.
The SDA approach is applied for high emitting industries while the value-added approach is based on a gross profit adjusted global budget. Each portfolio receives a carbon budget derived from the respective sectoral pathway from the IEA Net Zero 2050 scenario or if no matching sectoral pathway exists, from the global IEA Net Zero 2050 scenario. The IEA scenario data is scaled down based on the production level of the company respectively share of gross profit on GDP. For internally managed and passive strategies the budget targets are derived based on the underlying holdings. For externally managed funds the emission budget targets are based on the industry-mix of the corresponding benchmark.