SLC Fixed Income
SLC Fixed Income is the investment grade fixed income business of SLC Management, a global institutional asset manager that offers institutional investors traditional, alternative and yield-orientated investment solutions. SLC Fixed Income joined the Net Zero Asset Managers Initiative in June 2022 and made its initial target disclosure in June 2023.
Percentage of assets covered by the Net Zero Asset Managers Commitment Statement
21.5% of total AUM (USD $27.3 billion)
Information on interim target(s) covering the proportion of assets to be managed in line with net zero
Baseline(s):
Portfolio coverage baseline
Baseline of top 50 financed emitters in material sectors: 0% achieved net zero, 2% aligned, 34% aligning, 34% committed, 30% not aligned.
Portfolio decarbonisation reference baseline
Listed corporate bonds: 3,239,000 tCO2e Listed equities: 29,000 tCO2e.
Listed corporate bonds: 107 tCO2 e per million dollars invested; Listed equities: 77 tCO2e per million dollars invested.
Financed emission values are calculated in alignment with the Partnership for Carbon Accounting Financials (PCAF), Part A Financed Emissions 2nd Edition (2022).
Target(s):
Portfolio coverage target
Portfolio decarbonisation reference target
GHG scopes included:
Our targets cover Scope 1 and 2 financed emissions. As data improves for Scope 3 emissions, we will evaluate expansion of targets where relevant.
Methodology:
Net Zero Investment Framework
Scenario(s):
We reviewed several science-based pathways to determine an appropriate target. As a starting point, both listed equities and listed bonds were modelled to a 50% emissions reduction by 2030, as per the Intergovernmental Panel on Climate Change’s Global Warming of 1.5 degrees Celsius report from 2018, to identify investment impacts and trade-offs.
To provide more granular guidance by sector and geography, we also looked at the Emissions Reduction Plan in Canada, and global pathways including the Global Change Analysis Model (GCAM), the International Energy Agency’s 1.5 Degree pathway, and the Science-based Target Initiative sector pathway for aviation, to derive our targets. Geographic pathways were weighted based on issuer exposure.
Additional information
Proportion of AUM committed:
Our targets start with corporate bonds and equities as that is where data quality is the highest and there are methodologies for calculating financed emissions and setting targets. As data and methodologies improve, we intend to set targets on additional asset classes. Several asset classes we have exposure to do not have methodologies, such as securitized and provincial/state/municipal bonds. In-scope assets are those managed for our parent company Sun Life Financial Inc., who has a net zero target. We have a range of clients with various investment objectives; for those who have an investment objective to be managed in line with net zero, we will offer them the opportunity to be included in the future.
Policy on coal and other fossil fuel investments:
No. SLC Fixed Income does not have a blanket exclusion policy on coal or fossil fuels. We do implement exclusion policies if requested by asset owner clients or required by regulators. For in-scope assets with client prioritized mandates to be managed to net zero, investment considerations in companies with fossil fuel exposure incorporate the Net Zero Investment Framework.