Is it important for asset managers to attend COP28?

Senior investment consultant says at this year's COP the market should try not to be distracted by the politics

Jake Moeller, senior investment consultant at Square Mile, is looking forward to announcements at COP28 to “reaffirm and re-establish” the messages and ambitions around decarbonisation and a just transition.

In this video interview for ESG Clarity’s video series the Green Dream, he said he hopes companies and governments will become more proactive and not be distracted by the politicisation he said was seen after COP27 last year.

He also discusses where he is seeing innovation in governance and engagement and why it’s not enough for asset managers to simply attend COP28 and not be part of leadership initiatives.

Watch the full video interview above and read the transcript below.

NK: Hello and welcome back to the Green Dream. Today I’m joined by Jake from Square Mile. Thank you very much for coming in today, Jake. Quickly, tell us a bit about what you do.

JM: Natalie, a pleasure to be here. I’m a senior investment consultant at Square Mile Research and Consulting. It’s my remit to review investment funds and align them with the objectives of our clients. I also have a fairly broad ESG and responsible investing remit, so I’m keeping my eye on developments and what fund managers are doing with respect to any claims they make with regard to responsible investment.

NK: Okay, fantastic. And I wanted to ask you a few questions about those asset manager commitments. And we have COP28 coming up in terms of promises from last year’s COP27. Do you think we’ve seen the progress that we should have seen?

JM: It’s hard to remember about COP27. It happened so long ago, but there were a few initiatives, I think, which were quite valuable for the funds management industry. Biodiversity was put onto the agenda in a very, very firm way. And I think some of the biodiversity initiatives have resonated with funds managers. You’re seeing the launch of some biodiversity funds. They wouldn’t have done that without some sort of tailwind narrative to give them the support in the market that clients can pick up on. You’ve seen the just transition become really important that COP27 so the damage and loss fund was created to try and help poorer countries develop and make the ability to transition in low carbon environment, as they’re the ones who suffer the most from it.

And you’ve also seen the climate finance initiatives, which I think have managed to pump some money into renewable resources. So I think they’re three fairly good initiatives from COP27 that have resonated or the message is still resonating today. Some of those have been politicised a bit. You know, you think about the onshore wind farm going through the government at the moment, the damage and loss fund has been caught up in this debate around repatriation payments.

And as soon as you start hearing words like that creeping into the narrative, it can’t always be a good thing. So, you know, sometimes politicisation is creeping into this. But I hope that COP28 allows for the central messages to be reaffirmed and re-established in the market.

NK: Do you think that we are seeing progress on the asset management side as well in terms of how they’re looking at their emissions, how they’re decarbonising?

JM: I absolutely do think that’s the case, and I think that’s partly because gatekeepers like myself are asking questions often. But also, you know, trade journalists like yourself are asking questions of them and are holding their feet to the fire, so to speak. Yes, I do think fund managers are becoming much more cognisant of these issues and becoming much more proactive.

We have seen many more fund managers signing up to Paris alignment initiatives. The Paris Alignment Asset owners has become much more popular. The Net Zero Asset Management Alliance has proven to be very popular and a lot more fund managers are actually joining that. Some big name ones, unfortunately, are leaving. But again, it’s important that those sorts of initiatives are maintained.

You’re also seeing fund managers disclosing much better data, and they are asking much better data of the investee companies in which they deal with. So, you see some fund managers taking great initiatives in the Carbon Disclosure project, the Taskforce for Carbon related Financial Disclosures and the Task Force for Nature-related Financial Disclosures are all becoming more integrated in the fund management world. Also in the types of ESG questionnaires that we send out to the fund managers we’re asking more of them as well from these perspectives.

NK: Okay, that’s good to hear. And how important is it, do you think, that asset managers attend things like COP28 and are involved in those discussions?

JM: Well, I think attending is one thing, but showing leadership initiatives is more important for us when we get our ESG forms back, our questionnaires, we see a lot of fund groups that are signing up to things. Larger fund groups have bigger budgets, they can sign up to more things. Smaller fund groups don’t have as much budget for these sorts of initiatives, and they can’t. So should they be penalised? What we look for is leadership. Now, there are some fund groups that are very, very good at lobbying and getting involved with governance, with their investee companies. And we would much rather see that if a fund group says to me, we’re going to COP28, the next thing is shrug, what does it mean?

Unless it means something, unless it’s a leadership initiative and that you’re actively involved in some sort of plenary group or some sort of group that’s attached to lobbying or setting the agenda, it’s not just enough to say that you’re going. And how are you getting there, are you flying? You’ve got to be careful about those sorts of claims.

NK: So a really interesting point there. Thank you. And thinking about the fund research that you do at Square Mile, where are you seeing innovation in the industry from an ESG perspective?

JM: We are seeing some really, really interesting innovation around governance. We’re seeing fund groups now getting much better… I’ve mentioned that the carbon disclosures, but some fund groups are really taking a lead in derivative usage, and how do you get data on derivatives that’s carbon related. So we’ve seen some really interesting developments with fund groups on that side of things. Disclosures, trying to find data that’s in relation to Scope 3 emissions and really forcing the standardisation of reporting so that, if TCFD is becoming adopted by a lot more fund groups.

Now some of the some of the engagements we’re seeing are also really unique. So again, you don’t have to be a large fund manager with a big holding to make an engagement worthwhile. We spoke recently to a fund group who managed to get a petroleum company to seal up some of its methane emitting wells. It was just a small thing that they felt made a big difference, and it did. Another fund group that I spoke with recently on a small engagement was able to change the way that a river is traded in terms of some of run-offs that are happening. So cleaning up a river, it wasn’t a huge amount, but it mattered. We do see a lot of more accountability for governance.

Again, it’s gatekeepers keeping them to account and members of the media also doing a similar job. So we are, you and I are getting better at picking the greenwashing. Now. They know that. So they’re raising the bar

NK: We always end the Green Dream with this question, what is your favourite sustainable drink or snack?

JM: I’m very, very pleased to report, Natalie, that my favourite tipple, which is Bombay Sapphire Gin, has got a very, very good eco-cert rating for the sustainable sourcing of its botanicals, and that’s giving me a sense of satisfaction.

But also its distillery has a very good environmental rating. So, I’m drinking that gin with some abandon.

NK: Great, a G&T with a conscience!

JM: I haven’t done research on the tonics yet…

NK: Well, thank you very much for coming in today. Great to have you here, as always.


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...