As climate change evolves from an abstract risk to an immediate reality, many financial institutions are shifting their gears, striving to integrate their operations and investments with a net zero, nature-positive economy. Schroders, a significant player in the asset management landscape, is among these forward-thinking institutions.
In recent years, Race to Zero member Schroders, which is a partner of SBTi and Net Zero Asset Managers initiative, has been moving towards net zero, consciously infusing responsible practices throughout its operations and investment activities. They’ve taken cues from the “5P” framework (Pledge, Plan, Proceed, Publish, Persuade) conceived by Race to Zero, centralising nature within their strategic approach.
Pledge
Schroders made its stance clear in 2022 when it released its Group Nature and Biodiversity Position Statement. It’s more than just words – it’s an action plan to address nature and biodiversity impacts from their operations and investments. Schroders is also a signatory to the Finance for Biodiversity Pledge, which ties it to a broader collective effort of promoting best practices, analysing the ecological impact of financing activities, and setting and achieving nature-preserving targets.
One key pledge made by Schroders is their commitment to cut exposure to commodity-driven deforestation in their managed investment portfolios by 2025. This goal is a part of the broader Financial Sector Commitment on Eliminating Commodity-Driven Deforestation, which sees over 30 institutions, managing close to USD 9 trillion in assets, working together.
Plan
Schroders’ Plan for Nature, unveiled in 2022, is a detailed roadmap on how the firm is embedding nature considerations into its investment decisions. The plan rests on three pillars: insights, influence, and innovation.
Under insights, Schroders is putting effort into understanding companies’ and assets’ exposure to nature-related risks. To achieve this, they’ve developed proprietary models and frameworks for assessing biodiversity risks and impacts.
The influence pillar involves proactive engagement with companies to encourage best practices and manage nature-related risks. Lastly, Schroders is innovating to provide investment solutions that not only generate returns but also protect and restore nature. The firm’s focus on sustainable food systems, the circular economy, and the energy transition is indicative of this innovative approach.
Proceed
Schroders has been part of various initiatives driving positive change. It has teamed up with Conservation International on a project called Akaria Natural Capital, which invests in nature-based climate solutions in Southeast Asia. Schroders also backs initiatives led by its subsidiary, BlueOrchard, to finance conservation and reforestation projects in emerging markets.
Schroders’ work doesn’t stop at supporting others – it takes direct action too. The firm has directed its investments towards nature-based solutions and developed thematic funds targeting sustainable sectors. Through engagement with companies, Schroders also promotes nature-positive practices, responsible sourcing, and waste management.
Publish
Transparency is a key aspect of Schroders’ approach. It has provided insights into its nature-related initiatives through publications like the Plan for Nature and the Group Nature and Biodiversity Position Statement. These publications not only enhance Schroders’ accountability but also provide stakeholders with an understanding of how the firm integrates nature into its investment decisions.
Persuade
Schroders recognises the role of effective communication in promoting an understanding of nature-related issues. To this end, the firm uses articles, reports, podcasts, and videos to educate stakeholders about the importance of nature in investment decisions. Participating in global events like COP15, Schroders contributes to the broader dialogue on biodiversity conservation, nudging the financial industry towards a more nature-positive future.
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