Global advisory, broking and solutions company Willis Towers Watson announced today new sustainable investing targets, aiming to achieve net zero greenhouse gas emissions by 2050 at the latest, with at least a 50% reduction by 2030, in its fully discretionary delegated investment portfolios.
Under it delegated investment service, Willis Towers Watson designs solutions to enable clients to delegate responsibility for implementing asset strategies, while retaining strategic control and decision making in areas where they add most value. The company has $166 billion in assets under management globally across its delegated investment business.
Craig Baker, Willis Towers Watson’s Global Chief Investment Officer, said:
“Climate change, and a just transition to net zero greenhouse gas emissions, is a systemic and urgent global challenge. We believe that working to achieve net zero by 2050 in our discretionary portfolios is completely consistent with the financial goals we have been given by our clients as climate change has the potential to impact returns across multiple asset classes.”
The company outlined several initiatives to achieve the net zero transition, including decarbonization of existing investments and new investment in long-term climate solutions, risk management and asset allocation practices, manager selection, index design, stewardship and policy level engagement. Willis Towers Watson stated that it believes that engagement is likely to be more effective in decarbonizing the system than exclusions alone, but it recognizes that exclusions may be necessary at times where engagement cannot solve the problem.
According to the company, considering and managing the financial impact of climate change on investment portfolios falls under its duties as a fiduciary to always focus on its clients’ financial outcomes. Ultimately, the company believes that its net zero initiatives will enhance client outcomes.
“Being strategically ahead of a net zero transition will, in our opinion, significantly improve risk-adjusted returns for our clients. This will come from two sources – ‘better beta’ due to more effective stewardship and ‘alpha’ as the mispricing of climate issues is resolved. We think that understanding this transition will be one of the biggest sources of alpha across all asset classes and that this alpha opportunity is likely to be greatest in the next few years.”