Magellan Financial Group
Magellan Financial Group is an Australian investment manager focusing on global equities and global listed infrastructure. The firm joined the Net Zero Asset Managers Initiative in July 2022 and made its Initial Target Disclosure in September 2023.
Percentage of assets covered by the Net Zero Asset Managers Commitment Statement
12% of total AUM (USD $3.7 billion)
Information on interim target(s) covering the proportion of assets to be managed in line with net zero
Baseline(s):
Portfolio coverage baseline
As at 31 December 2022, on a weighted average AUM basis, more than 80% of AUM in Magellan, MFG Asset Management, and MFG Core Series branded investment products (hereafter ‘strategies within scope’) in high impact material sectors are considered ‘net zero’, ‘aligned’, ‘aligning’. This varies by strategy given the different sector exposures with some strategies less than 80%. On a weighted average basis 27% of AUM in strategies within scope in high impact material sectors are net zero or aligned.
Portfolio decarbonisation reference baseline
520,289 tCO2e
Engagement threshold baseline
Across all strategies within scope, 39% of financed emissions in high impact material sectors are net zero or aligned. These targets will be managed at the portfolio level; it should be noted that the proportion of financed emissions in high impact material sectors that are net zero or aligned ranges from 0 – 85% within the individual strategies covered by this disclosure.
Across all strategies within scope, 70% of financed emissions in high impact material sectors are subject to engagement. These targets will be managed at the portfolio level so it should be noted that the proportion of financed emissions in high impact material sectors that are subject to engagement range from 21% – 100% within the individual strategies covered by this disclosure. The lower end of this range includes some of our newer strategies and the goal is to increase the engagement with the companies that are not meeting the definition of ‘aligned’ to net zero.
Target(s):
Portfolio coverage target
5 year target: 80% AUM invested in assets in high impact material sectors that are i) achieving net zero, or, meeting the criteria to be considered ii) ‘aligned’ or iii) ‘aligning’ to net zero (using NZIF).
The 2028 target is set on the basis that changes to business mix may result in an increase in the proportion of AUM whose baseline performance is currently less than the average baseline.
Portfolio coverage target
100% of assets in high impact material sectors material sectors to be i) net zero or ii) aligned to net zero
Portfolio decarbonisation reference target
-40 to -45%
Engagement threshold target
A current engagement threshold which ensures that at least 80% of financed emissions in high impact material sectors are either assessed as net zero, aligned with a net zero pathway, or the subject of direct or collective engagement and stewardship actions. By 2030, at least 90% of financed emissions in high impact material sectors are either assessed as net zero, aligned with a net zero pathway, or the subject of direct or collective engagement and stewardship actions.
GHG scopes included:
Targets are set for Scope 1 & 2 emissions.
Scope 3: We are tracking the companies that are disclosing Scope 3 emissions as part of our assessment of alignment to net zero under the Net zero investment framework (NZIF) in our NZAM work. This is done using external ESG data providers and company reports. In engagement with companies, we consider the material Scope 3 emissions and whether the company has emission reduction targets (preferably Science based targets verified). We will continue to monitor the availability and reliability of Scope 3 data for our portfolio. Until this becomes more reliable, we are not in a position to set a Scope 3 portfolio target.
Methodology:
Net Zero Investment Framework
Scenario(s):
Sector based decarbonisation targets have been determined based on IEA Net Zero 2050 report and Science based target initiative.
Additional information
Proportion of AUM committed:
Targets are based on sectoral pathways in the context of global pathways. Sectoral decarbonisation targets have been determined based on the IEA Net Zero 2050 report and the SBTi company level targets, verified for 1.5degree pathway. A baseline of 2022 has been considered in setting the 2030 target.
Targets were set in line with sectoral science based pathways that are consistent with achieving net zero global emissions by 2050 or sooner. Fair share emission recognises that within the ultimate goal to reduce global GHG emissions to net zero by 2050, sectors, industries and regions will decarbonise at different rates. The Magellan target reflects the representative sector exposures in the Magellan investable universe, which differ materially from sectoral contributions to global GDP or the aggregate market capitalisation of global equity benchmarks, owing to stylistic factors; a ‘fair share’ contribution and different baseline results in a target range of 40-45% by 2030.
Policy on coal and other fossil fuel investments:
The Magellan investment universe across the Global Equities, Global Sustainable and Global Core Series products excludes companies with commodity-like economics, in particular resources and basic materials, resulting in very low exposure to fossil fuels.
Magellan’s sustainable strategies implement a proprietary low carbon emissions overlay into portfolio construction. This screens out companies based on their carbon emissions intensity. Exclusions are also implemented for the Sustainable strategies for companies engaged in the extraction, storage and transportation of fossil fuels. Other strategies not covered by this target could consider a policy in the future.