Climate Risk
We utilize active ownership strategies to encourage companies to pursue a path toward a net zero emissions future.
The changing climate is an extraordinary environmental challenge with far-reaching economic, environmental, and societal implications, creating risks and opportunities for companies and investors.
As fiduciaries, we aim to manage the associated risks and opportunities. We support efforts to reach carbon neutrality by 2050 to limit warming to 1.5 degrees Celsius above pre-industrial levels and avoid the most catastrophic consequences of climate change. Given the current trajectory of global emissions, successfully achieving the 2050 target requires interim goals and plans for meaningful action by a range of stakeholders. To reinforce our support of these efforts, we became an early signatory to the Net Zero Asset Managers initiative (NZAM) in 2021 and published formal targets in 2022. Learn more about Boston Trust Walden’s progress toward achieving our NZAM targets in our 2023 report, Principled Investing and Climate Risk.
In 2022, Boston Trust Walden formally announced targets in support of our commitment to the Net Zero Asset Manager (NZAM) Initiative. We are committed to doing our part to accelerate global efforts to achieve net zero greenhouse gas emissions by 2050 or sooner.
Our Strategy (2024)
As investors who hold shares of publicly traded securities, we believe we have a unique ability to influence corporate leadership to advance solutions to the climate crisis. We encourage companies to pursue a path toward a net zero emissions future by asking them to:
Set greenhouse gas (GHG) emissions reduction targets based on widely-accepted scientific research.
Specifically, we ask companies to set “science-based targets” (SBTs) aligned with the Paris Climate Agreement, which aims to limit the increase in the global average temperature to below 1.5° Celsius if the world is to avoid catastrophic impacts of climate. To achieve this goal, emissions must halve by 2030, and decrease to net zero by 2050.
Align direct and indirect lobbying policies and activities with the goals of the Paris Agreement.
Corporate lobbying activities have a significant influence on climate policy and can either complement or contradict a company’s public strategy and goals. We ask companies to ensure their own lobbying efforts, as well as those conducted by trade associations and other member groups, are aligned with the companies’ stated sustainability commitments.
Advocate for and support science-based climate policy with lawmakers at the regional, national, and international levels.
Smart climate policies are essential to catalyze the rapid emissions reductions needed in the market. We believe a vocal corporate constituency in support of effective climate policy is crucial for mitigating climate-related risks and enabling new market opportunities.
The three components of our climate risk engagement strategy are interrelated and self-reinforcing. As companies set science-based targets, they signal to lawmakers that addressing climate change makes good business sense, enabling legislators and regulators to develop sound public policy solutions to mitigate climate change. With an informed and effective public policy framework in place, companies are better able to achieve climate-related goals.
Key Considerations
We consider several indicators of corporate performance related to climate that inform our engagement, including GHG reduction initiatives, energy efficiency and natural resource conservation, commitment to renewable fuel sources, public policy positions, and lobbying activity.
Solutions to climate change must consider the supply and demand for energy. Thus we engage both suppliers (i.e., fossil fuel companies and utilities) and corporate users of energy.
Climate change affects different sectors and industries in distinct ways. The SASB Standards describe climate risk as “ubiquitous but differentiated.” While companies face unique discrete risks associated with climate change, we believe all companies have an opportunity to help reduce emissions.
Company-specific action to mitigate climate change can be cost-effective, as demonstrated by the return on investment companies receive from energy efficiency projects and the competitive price companies are now paying for renewable energy.
