Sage Advisory is an independent investment advisory firm headquartered in Texas serving the institutional and private client marketplace. It joined the Net Zero Asset Managers Initiative on 20 April 2021 and its initial target disclosure was published on 1 May 2022.
Percentage of assets covered by the Net Zero Asset Managers Commitment Statement
15% of total AUM (USD $1.5 billion)
Information on interim target(s) covering the proportion of assets to be managed in line with net zero
Portfolio coverage baseline
15% of portfolio companies setting a science-based target
Portfolio decarbonisation reference baseline
Portfolio coverage target
70% of portfolio companies setting a science-based target
Portfolio decarbonisation reference target
GHG scopes included:
Portfolio reference targets were set with Scope 1 and 2 emissions in mind. As only 70% of S&P 500 companies report on GHG emissions (with less than 30% for small and mid-cap), the US investment universe still has a lot of work to do. We utilise ISS ESG Climate Analytics to make the estimates for us when this information is lacking. However, based on these gaps in reporting for Scope 1 and 2, the estimates in Scope 3 right now are really for educational purposes only, and we still need better standardisation and disclosure from US companies on emissions in general.
Science Based Target initiative for Financial Institutions
Targets are derived and we model our portfolios glidepaths by utilising the IEA’s Sustainable Development Scenario
Proportion of AUM committed:
Sage has made the determination not to include all portfolios under the goal at the current time. Some clients still need to be educated on what the potential impacts on portfolio construction (and investment outcomes) would be with the adoption of a net zero aligned strategy. Also, as we manage US dollar denominated strategies that include primarily US companies, there is still a lag on greenhouse gas reporting and target setting from US companies, which makes it harder for us as asset managers to fully assess the implications of going to 100% net zero.
Policy on coal and other fossil fuel investments:
Sage currently has a policy that prohibits investing in companies involved with thermal coal extraction. The in scope AUM includes all policies that are committed to be in line with the NZAM initiative. Sage is in the process of enhancing this strategy to include other fossil fuel utilisation (which will include companies throughout the oil and gas value chain to include utilities and mid-stream companies).
Target setting: Sage’s goal by 2030 is to have all companies within the portfolio be on a credible net zero path or very close. For those companies that aren’t on a 1.5°C temperature path, we want to make sure we are selecting those that have as close of a temperature score of 1.5°C as possible