Spotlight on Nico Aspinall, Sustainability Advocate, Newton Investment Management
Global Thought Leader Spotlight
Nico Aspinall, Sustainability Advocate, Newton Investment Management
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In my role as Sustainability Advocate at Newton Investment Management, I am responsible for promoting our sustainable investment proposition, with a particular focus on climate change. The role is a combination of strategy, marketing, client relationships and sales, so it’s best to describe me as a connector in the business and between the business and the marketplace for our products.
Portfolio vs real-world decarbonisation
Addressing greenhouse-gas emissions is an urgent and critical task. Investment is needed to accelerate the shift towards a ‘greener’ world to protect our economy, society and environment from climate change, and we need to do it at pace. That means investors investing in the companies that are already part of the future energy and technology mix, as well as those that are part of the current mix but earnestly planning to be a part of the future one. It also means investing in the regions where the vast majority of future emissions will originate – emerging markets.
There are two contrasting ways in which investment managers can support this progress towards a genuinely carbon-neutral economy.
The first is through portfolio decarbonisation – investing only in companies with the lightest emissions at the expense of those with the heaviest, i.e. avoiding companies with operations in regions with higher emissions in their grids (e.g. South Africa).
The second is via real-world decarbonisation – investing in companies with robust transition plans ahead of those without plans or with weak alignment behind them. Real-world decarbonisation focuses on a company’s pathway of emissions, and the likelihood of it achieving reductions consistent with a 1.5-degree path to net zero by 2050.
We have been through a phase where net zero-committed asset owners have had little choice but to go down the route of portfolio decarbonisation. We think this has been unhelpful for the transition itself, but, increasingly, better reporting and clarity from companies across many sectors is making real-world decarbonisation a plausible alternative.
Time for execution is now
Achieving net zero via ‘real-world’ decarbonisation means investing in the companies we believe are best placed to deliver on their pledges and commitments to turn into low-emissions businesses, regardless of current emission levels. We have witnessed a surge in companies committing to achieving net-zero emissions, enhanced reporting on progress and alignment with science-based targets to reduce emissions.¹ That means the universe of companies with improving plans is now large enough to make real-world decarbonisation portfolios possible.
We believe these companies will be more resilient to transition risks because ‘plan beats no plan’; it is easier to accelerate your decarbonisation plans in response to energy-price volatility than to form plans on the hop.
Real-world decarbonisation also supports the ‘just transition’ – the need to move and retrain the labour force to participate in the low-carbon economy. Companies within heavy-emitting sectors with robust approaches to the transition will necessarily be considering evolving their workforces.
The main takeaway from last November’s COP28 UN climate change conference must be that the time for execution is now. This is why we, and other active investors with a net-zero mandate, must carefully consider the credibility of company transition plans, and support those we believe are better equipped to achieve net zero, rather than blindly disinvesting from the real world.
Nico will be presenting at Global Investment Institute’s upcoming Net Zero Investment Forum, taking place on Wednesday, 27 March 2024 at the Grand Hyatt Melbourne, Victoria.
To register your interest in attending, click here or for more information email zlatan.kapetanovic@globalii.com.au.
Source:
[1] https://sciencebasedtargets.org/reports/sbti-monitoring-report-2022.
Nico Aspinall, Sustainability Advocate, Newton Investment Management
Nico is a sustainability advocate, focused on communicating Newton’s approach to responsible investment and sustainability both internally and externally. Nico joined Newton in July 2023 and has previously held several roles in pensions investment for consultants, asset owners and asset managers, including being the first chief investment officer of The People’s Pension, a leading UK defined contribution (DC) master trust.
Nico holds a Master’s degree in Natural Sciences specialising in Theoretical Physics from the University of Cambridge and is a qualified actuary.
Nico volunteers extensively for the Institute and Faculty of Actuaries, contributes to research papers, and is currently the deputy chair of the Institute’s Finance and Investment Board.
In his free time, Nico co-hosts V-FM pensions, a podcast about DC pensions.
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