Climate Action: amplifying the voice of investors

The vital role of stewardship in the last stand against climate change

Watch our COP26 #FurtherFaster conference

Federated Hermes hosted on 4 and 5 November, to address three interlinked emergencies of Climate, Nature and Social Injustice.

“The 1.5°C warming target is not out of the world’s reach, but we are fast running out of time.

“Coal, carbon markets and financing are among the issues upon which we hope to see meaningful progress at COP26. However, we are acutely aware of the power and responsibility that we all have as investors. Engagement and stewardship are primary tools in delivering a positive ‘real world’ contribution to the fight against climate change. As the crisis becomes more urgent and the impact more visible in our everyday lives, our willingness to mobilise our influence as investors will be pivotal to how this global story plays out.”

“The 1.5°C warming target is not out of the world’s reach, but we are fast running out of time.

“Coal, carbon markets and financing are among the issues upon which we hope to see meaningful progress at COP26. However, we are acutely aware of the power and responsibility that we all have as investors. Engagement and stewardship are primary tools in delivering a positive ‘real world’ contribution to the fight against climate change. As the crisis becomes more urgent and the impact more visible in our everyday lives, our willingness to mobilise our influence as investors will be pivotal to how this global story plays out.”
Eoin Murray
Eoin Murray
Head of Investment, International at Federated Hermes
Sunset on the steppe landscape
Eoin Murray
Eoin Murray
Head of Investment, International at Federated Hermes
Mountains landscape around the lake
Saker Nusseibeh
Saker Nusseibeh, CBE
CEO, International at Federated Hermes

Key takeaways

  • Science tells us that there is a climate crisis that we must deal with urgently
  • Scientists need to talk science to powerful people who can then make the necessary changes. One of the problems is that business leaders and scientists don’t necessarily speak the same language
  • Positive tipping points have led to some big changes in climate friendly tech adoption. These have included a surge in electric vehicle use in Norway and the elimination of UK coal power stations. Tipping points are hard to plan but policy makers and public sentiment can help tilt trends the right way
  • Get your kelp on: Seaweed could help capture carbon dioxide from the atmosphere in a similar way that forests do. They could be the forests of the sea, and seaweed is also a nutritious food
  • A shift to net zero aviation will need a shift in the infrastructure that supports the industry. In other words, it may be a costly change

Key takeaways

  • The investment industry is not set up to deal with the climate crisis. It is too short term focused where the climate solution needs long term focus
  • We are the temporary stewards of our infrastructure assets, some of which will last far longer than we will
  • Many of the UK’s infrastructure assets are owned by the private sector including gas, water and power, utilities, as well as rail and air travel facilities
  • The renationalization of these infrastructure assets won’t be enough to solve the climate crisis
  • Ignoring science is at odds with fiduciary responsibilities of investors and business chiefs

Key takeaways

  • Over 99% of fashion products are either incinerated or end up in landfill
  • Pollutants from fashion manufacturing are leaking into the ocean
  • A circular economy business model could unlock a lot of value for the fashion industry
  • The fashion industry needs better ways to recycle its products
  • The industry needs targets for clothing recycling
  • „Consumer preference and government regulations are big risks for fast fashion,“ says Lisa Lange Federated Hermes

Key takeaways

  • Climate models are the result of incomplete data. They are by their very nature less than perfect
  • To better tackle the climate crisis, communities need to be integrated with nature
  • The world needs to embrace sustainability science to reach net zero

Key takeaways

  • Fixed-income investors, more than stock owners have the possibility to steer industry to reach climate goals
  • Corporations refinance their debt every seven years and so need to engage with their lenders frequently
  • Companies that do better on climate change will ultimately have lower borrowing costs
  • We need to be transparent about what compromises are involved in fighting climate change

Key takeaways

  • The move to a net zero world isn’t a zero-sum game
  • We must account for the costs of the communities affected by a move to a climate friendly economy. If we don’t then it won’t work, because some communities will bear a larger burden than others
  • Disasters linked to climate change have killed 150 people per day
  • We can’t deny the link between social justice and climate change
  • Finance can help advance social justice
  • The cost of making the economy greener should not be paid for by regressive taxes. It should be borne by those who can afford it, rather than those least able to bear it

Spotlights from our #FurtherFaster conference

Key takeaways

  • Science tells us that there is a climate crisis that we must deal with urgently
  • Scientists need to talk science to powerful people who can then make the necessary changes. One of the problems is that business leaders and scientists don’t necessarily speak the same language
  • Positive tipping points have led to some big changes in climate friendly tech adoption. These have included a surge in electric vehicle use in Norway and the elimination of UK coal power stations. Tipping points are hard to plan but policy makers and public sentiment can help tilt trends the right way
  • Get your kelp on: Seaweed could help capture carbon dioxide from the atmosphere in a similar way that forests do. They could be the forests of the sea, and seaweed is also a nutritious food
  • A shift to net zero aviation will need a shift in the infrastructure that supports the industry. In other words, it may be a costly change

Key takeaways

  • The investment industry is not set up to deal with the climate crisis. It is too short term focused where the climate solution needs long term focus
  • We are the temporary stewards of our infrastructure assets, some of which will last far longer than we will
  • Many of the UK’s infrastructure assets are owned by the private sector including gas, water and power, utilities, as well as rail and air travel facilities
  • The renationalization of these infrastructure assets won’t be enough to solve the climate crisis
  • Ignoring science is at odds with fiduciary responsibilities of investors and business chiefs

Key takeaways

  • Over 99% of fashion products are either incinerated or end up in landfill
  • Pollutants from fashion manufacturing are leaking into the ocean
  • A circular economy business model could unlock a lot of value for the fashion industry
  • The fashion industry needs better ways to recycle its products
  • The industry needs targets for clothing recycling
  • „Consumer preference and government regulations are big risks for fast fashion,“ says Lisa Lange Federated Hermes

Key takeaways

  • Climate models are the result of incomplete data. They are by their very nature less than perfect
  • To better tackle the climate crisis, communities need to be integrated with nature
  • The world needs to embrace sustainability science to reach net zero

Key takeaways

  • Fixed-income investors, more than stock owners have the possibility to steer industry to reach climate goals
  • Corporations refinance their debt every seven years and so need to engage with their lenders frequently
  • Companies that do better on climate change will ultimately have lower borrowing costs
  • We need to be transparent about what compromises are involved in fighting climate change

Key takeaways

  • The move to a net zero world isn’t a zero-sum game
  • We must account for the costs of the communities affected by a move to a climate friendly economy. If we don’t then it won’t work, because some communities will bear a larger burden than others
  • Disasters linked to climate change have killed 150 people per day
  • We can’t deny the link between social justice and climate change
  • Finance can help advance social justice
  • The cost of making the economy greener should not be paid for by regressive taxes. It should be borne by those who can afford it, rather than those least able to bear it

Key takeaways

  • Over recent years, business leaders and their companies have come to realise they are a part of society, rather than apart from it. They need to ask themselves whether their companies make the world a better place.
  • The International Sustainability Standards Board is a great leap forward, as it will help hold businesses accountable for their actions. However, we must make sure those standards are appropriate.
  • Benchmarking shows that many companies are not planning for a future of sustainable growth.

Key takeaways

  • The climate crisis is a wake-up call to the world, which faces mass plant and animal species extinction and systemic collapse.
  • The crisis is terrifying, but it does not have to be the legacy we leave. We can act now to save the future.
  • Investors need to think about how their stewardship of capital can be used to make the world a better place.

Key takeaways

  • Your morning cup of coffee is under threat, with 60% of coffee varieties at risk of being wiped out due to biodiversity loss caused by climate change.
  • Our oceans are at risk. Pollution and acidification have been responsible for the loss of 70% of the world’s fish since the Industrial Revolution. By 2050, there is expected to be more plastic in the sea than fish.
  • Pollution is harming the health of ocean organisms, and that threatens everyone’s wellbeing. About 80% of our breathable air comes from the oceans and relies on healthy clean seawater.
  • Ocean acidification is the evil twin of climate change. It is caused by toxic pollution.