Schroders' CEO Peter Harrison tells Net Zero Festival that companies must quickly turn net zero targets into actionable strategies or face mounting pressure from investors
The boss of one of the UK's leading asset management firms has warned investors will not shy away from voting against management teams if companies do not deliver meaningful change to drive the pursuit of their net zero targets.
Speaking during BusinessGreen's Net Zero Festival today, Schroders' CEO Peter Harrison said the next 12 to 24 months would highlight whether businesses were taking suffient steps to digitise their operations, invest in fleets of electric vehicles, and undertake other meaningful reforms in support of long term net zero goals.
"We've got to be very clear that if companies don't go on that transition, and don't walk the walk, then we need to change the leadership of those businesses to make them do it," he said. "The challenge here is avoiding a mismatch between reality and rhetoric and, at the end of the day, exposing that data is going to be the biggest challenge and then publishing that data for every client, every portfolio."
Schroders is one of 128 asset managent firms, with a combined total of $43tr in assets, to join the Net Zero Asset Managers initiative. Each of the firms signed up to the group has pledged to hit net zero across their portfolios by 2050 or sooner and are now in the process of updating their investment and engagement strategies to rapidly curb the emissions of the companies they own.
Harrison said net zero targets were informing both the assets firms chose to hold and the manner in which they engage with carbon intensive industries.
He highlighted how investors "wouldn't want to be long with coal assets under any circumstances", but he also argued that oil and gas firms with credible net zero targets could still play an important role in the decarbonisation of the global economy. "If you can unleash all those engineers who are working in oil companies - and that capital - to start investing in new solutions you absolutely want to do that," he said.
Harrison also stressed that the pursuit of net zero emissions was now the "single most important thing for the organisation", adding that employees right across the business had embraced the need to decarbonise as swiftly as possible. "This is now what we're about and if you don't want to come on that journey then this isn't the organisation for you," he said.
You can still sign up now for a pass to this week's Net Zero Festival here.