NEI Investments
NEI Investments is a Canadian asset manager committed to helping investors achieve their financial goals while making a positive difference on society and the environment. NEI joined the Net Zero Asset Managers Initiative in October 2021 and made its Initial Target Disclosure in January 2023.
Percentage of assets covered by the Net Zero Asset Managers Commitment Statement
76.9% of total AUM (USD $6.846 billion)
Information on interim target(s) covering the proportion of assets to be managed in line with net zero
Baseline(s):
Portfolio decarbonisation reference baseline
238.8 tCO2e/M. USD sales
363 tCO2e/M.USD sales
Engagement threshold baseline
Baseline performance: financed emissions net zero or aligned – 16%
Baseline performance: financed emissions under engagement – 29%
Allocation to climate solutions baseline
Total AUM in relevant funds is US$1.6 billion, % aligned with climate solutions taxonomy TBD.
Target(s):
Portfolio decarbonisation reference target
30% reduction by 2025; 60% by 2030.
Our portfolio decarbonisation target is currently relevant for 10% of our committed AUM, which represents two funds where we have agreed with our sub-advisor on the strategy (thus the two baselines). The target will be revisited in 2025 to determine if we should increase the ambition. As we engage with our remaining sub-advisors we may expand the AUM coverage to include more funds.
Engagement threshold target
By 2025, 70% of financed emissions in material sectors are net zero, net zero aligned, or the subject of engagement.
By 2030, 90% of financed emissions in material sectors are net zero, net zero aligned, or the subject of engagement.
By 2040, 100% of financed emissions in material sectors are net zero or net zero aligned.
The engagement threshold target is relevant for all of our committed AUM.
Allocation to climate solutions target
Tripling of assets under management in climate solutions investments.
We chose a tripling of AUM to align with the IEA’s Net Zero by 2050 Scenario, which requires a tripling of clean energy investment by 2030. Our definition of climate solutions aligns with the Net Zero Asset Owner Alliance’s definition, namely: investments in economic activities considered to contribute substantially to climate change mitigation and/or climate change adaptation. We currently have five impact funds that intentionally invest in equities and bonds that align with this definition. These funds represent our starting universe of climate solutions, and we plan to benchmark and disclose the % AUM in these funds that aligns with existing taxonomies of climate solutions. Current AUM in these funds is US$1.6 billion (roughly 20% of total AUM). We intend to meet our climate solutions target through increasing sales of these funds (primarily on standalone basis and via NEI Investments’ balanced and portfolio solutions) and launching new funds that meet our criteria.
GHG scopes included:
We plan to assess our portfolio and report against scope 1 and scope 2 emissions initially. We plan to address scope 3 emissions as we get more comfortable with the data and disclosure methodologies.
Methodology:
Net Zero Investment Framework
Scenario(s):
We have relied on the recommended targets as established by the NZIF framework that are based on a 1.5 degree scenario.
We believe our target makes the best use of our organization’s historic and ongoing strengths and will ultimately enable our biggest impact on real world emission reductions. Along with our commitment to engage policymakers and standard-setters to create the necessary policy environment to achieve a net-zero future, we believe engaging our portfolio companies to implement credible transition strategies that lead to real emissions reductions should be our near-term imperative. However we do believe that engagement alone will not be enough and are committed to growing our offering of climate-focused investment products that will support the creation of the climate solutions we need to transition to a net zero economy. We will also continue to set fund-specific net-zero targets. As we work with our sub-advisors on these shared net-zero strategies, we intend to regularly update our strategy to reflect progress in increasing the scope and ambition of our targets.
Additional information
Proportion of AUM committed:
We are including all developed market equities and investment grade corporate debt across all relevant funds. We have chosen to exclude, for now, derivatives and sovereign debt based on concerns around data availability and quality or where further discussion with our sub-advisors is required to determine how we can incorporate these assets in our net-zero target. We expect to increase the proportion of AUM managed in line with net zero as data quality improves and in coordination with our sub-advisors.
Policy on coal and other fossil fuel investments:
While approximately 16% of our AUM as of February 28, 2022 is in funds that have explicit restrictions on fossil fuel investment, the restriction is fund specific and we do not have a firm-wide exclusion policy for fossil fuel investment. We have been engaging the sector on climate-related issues and reporting on our results for over 15 years. We continue to believe we can more effectively drive the necessary real-world emissions reductions required of our economy by actively engaging the sector to align with net zero.
Further information:
Target-setting: The only target category we are not disclosing on at this time is the portfolio coverage target. Our current focus is on engaging portfolio companies to align their business strategies with a net zero pathway. We have an internal goal of engaging all of our sub-advisors to build a common net-zero strategy and it is our expectation that each sub-advisor may follow a different net zero methodology/pathway, so we anticipate that future NZAM updates will include additional target types.
While we have a portfolio decarbonisation target for certain funds, we intend to track our broad portfolio decarbonization progress and report publicly using an appropriate portfolio-level carbon metric. We are currently anticipating we will use Weighted Average Carbon Intensity (WACI) to measure decarbonization progress and commit to reporting publicly on it in our annual TCFD reporting, in addition to future NZAM progress updates.
Operational-emissions: We have publicly committed in our Climate Strategy to set corporate goals for reducing our operational emissions and this has been identified as a priority for the company. We have not as of yet set a target.
The NEI Climate Strategy, which contains our commitments beyond the NZAM initiative, can be found here: https://www.neiinvestments.com/documents/FocusList/NEI_ClimateStrategyCommitment_NOV21_EN.pdf