St. James’s Place is taking the lead on climate risk disclosure because the sustainable economy brings investment opportunities, clients care about it, and it is the right thing to do.
The quick read
St. James’s Place is taking several urgent actions to tackle climate change. The most recent is a pledge to disclose its climate-related risks in 2021 – a year earlier than required by the UK’s green finance strategy.
Investors face a pressing need to tackle the mounting human cost of climate breakdown. In 2018, more than 60 million people suffered the effects of extreme weather1. In 2019, climate shifts contributed to 15 disasters that each caused at least $1 billion in damage2. Four of the top five risks identified by global business leaders are environmental3. The fifth relates to infectious disease, which is closely linked to environmental factors.
Without urgent action, all these effects will amplify quickly. But promoting a sustainable, low-carbon economy brings many investment opportunities, too. The UK’s green finance strategy aims to help the financial system harness these opportunities.
Central to the green strategy is the expectation that all listed companies and large asset owners should disclose risks in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations by 2022.
The task force provides a framework for firms to report climate-related risks, encouraging greater transparency with stakeholders on this issue, which ultimately affects all our futures. St. James’s Place has decided to disclose in line with TCFD a year early, with its first report published in April this year.
Taking the environmental lead
The move is part of the wealth manager’s wider environmental strategy, which has also included signing up to the UN’s Principles for Responsible Investment (PRI) and Net-Zero Asset Owner Alliance (NZAOA), with aims to transition portfolios to net zero emissions by 2050.
There has been a huge shift towards awareness of climate change among clients of St. James’s Place, therefore they have decided to be proactive and act. In 2020, 82% of UK independent financial advisers reported an increase in enquiries from clients on climate change investment4, and 46% of prospective clients said the environment was as important to them as returns5.
Amelia James, Head of Environmental Strategy at St. James’s Place, says: “We want to accelerate the transition to a low-carbon economy. Aligning with TCFD early is a powerful way to demonstrate that climate change is one of the biggest challenges we face, and we need to act now.”
“Clients are realising that climate change is not just an environmental issue, but also has humanitarian, economic and health impacts, too. We know how important it is that we begin to make changes and support a smooth climate transition.”
James highlights research showing that good scores on environmental, social, and governance (ESG) factors also impacts share prices positively6. With all these factors together, it makes sense to invest in firms with good environmental strategies, or those that are working towards it.
“To ensure our environmental strategy is effective, we have embedded it throughout our culture, financial model and strategic priorities,” says James. “That makes sure we back up all our commitments with actions. Plus, it builds a sense of community and a shared purpose with our employees, our clients and Partnership.”
One challenge is that research shows 58% of advisory clients are still not clear whether they can invest their money to tackle environmental challenges7.
James says: “You can make a difference through your investments. Financial Services have a responsibility to educate their clients on this matter, and TCFD can become a great tool and catalyst for this education.
Other research shows that moving your pension to a sustainable fund is the best way to make a positive impact – it is 27 times more effective than eating less meat, using trains instead of cars, flying less, and taking shorter showers8. Plus, you can do it without changing your life drastically.
St. James’s Place’s responsible investing page and TCFD report are designed to explore these subjects in more detail. Browse them and start finding out how you can benefit from the opportunities in a sustainable, low-carbon economy.
Our world is changing faster than anyone predicted. We believe responsible investing has a huge role to play in shaping a better world and building a sustainable future.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.
1 United Nations, Extreme weather hit 60 million people in 2018, January 2019
2 Christian Aid, Counting the cost 2019: a year of climate breakdown, December 2019
3 World Economic Forum, The global risks report 2021, January 2021
4 Federated Hermes, UK IFAs report major rise in ESG allocations since start of COVID-19 outbreak, May 2020, total sample size: 200 IFAs
5,7 St. James’s Place and The Wisdom Council, Responsible Investment 2020, January 2021, total sample size: 2,067 adults
6 New York University Stern Center for Sustainable Business and Rockefeller Asset Management, ESG and financial performance, February 2021
8 Nordea, Use your savings to lower your carbon footprint, June 2018
Some of the products and investment structures documented within this article will not be available to our clients in Asia. For information on the funds that are available please get in touch.