Ostrum Asset Management has taken decisive action to tackle the climate emergency as it extends its coal sector exit strategy and today announces its goal to fully phase out coal exposure by 2030 for OECD countries and by 2040 for non-OECD countries, driven by its fiduciary responsibility as a leading investor.
Ostrum Asset Management rolled out an initial coal exclusion policy in 2018 before adding to its pledges in 2019, and now takes fresh measures to bolster this strategy, setting out a timetable for application to all open-ended funds1 it manages, as well as all mandates and dedicated funds, unless clients request otherwise:
- Ostrum AM will no longer invest in companies that develop new coal projects, with effect as of January 1, 2021 for investments, and with a six-month timescale for divesting holdings in companies concerned under normal market conditions.
- Ostrum AM will no longer invest in companies that have not set out a transition plan by 2021 to exit the coal sector in alignment with the Paris Agreement, and will undertake individual engagement efforts with any companies that do not already have a withdrawal plan in 2020 to inform them of this timeframe. Investments will cease as of January 1, 2022, with a six-month timeframe to run down existing positions under normal market conditions.
- Ostrum AM will engage and dialogue extensively with companies as it applies this measure. Ostrum AM halted investment in companies that derive more than 25% of their revenue streams from coal in June 2019, while definitive divestment is slated by June 2021. This exclusion threshold will be reviewed by end-2021.
- Coal issuers that are not ruled out on the basis of previous criteria will be excluded as of January 1, 2021 if they exceed the other thresholds set out by the 2019 Global Coal Exit List (GCEL)2, with divestment within six months.3 Ostrum AM will evaluate this policy on a regular basis and strengthen its exclusion thresholds accordingly.
As part of its commitment to both its clients and the broader industry’s ecosystem, Ostrum AM recently took part in drafting the White Paper on Coal Exit, an initiative from the French Asset Management Association (AFG) that encourages investment managers to implement coal exit policies in a timely manner. Ostrum AM also produces carbon reporting for its portfolios, complying with the Taskforce on Climate-related Financial Disclosures’ (TCFD) recommendations and has developed a methodology to report on portfolios’ alignment with the Intergovernmental Panel on Climate Change’s (IPCC) temperature scenarios.
Nathalie Pistre, Head of Research and SRI at Ostrum AM, states: “Our moves to ramp up our coal withdrawal strategy herald a new stage in our contribution to tackling climate challenges and further attest to our responsible investment commitment. We also support our clients as they apply their own climate policies both by rolling out tailored measures and offering investment strategies to help them establish their own pledge“.
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2 The GCEL is an initiative by German NGO Urgewald, following the realization of investors’ difficulty in tracking their coal investments. The GCEL provides datasets on 2,300 companies’ coal-related revenues streams, the proportion of coal production, installed coal capacity and annual coal production. The list of parent companies and subsidiaries involved is available online at https://coalexit.org.
3 Exceptions may be possible where extensive analysis of the company indicates a strong commitment to a credible exit scenario.
Ostrum Asset Management
An affiliate of Natixis Investment Managers.
French Public Limited liability company with board of Directors.
Share capital €48 518 602.
Regulated by the Autorité des Marchés Financiers (AMF) under no. GP 18000014.
RCS Paris n° 525 192 753.
43 avenue Pierre Mendès France 75013 Paris, France.
Natixis Investment Managers
Natixis Investment Managers is a subsidiary of Natixis.
Portfolio management company - French Public Limited liability company
RCS Paris n°453 952 681
Registered Office: 43, Avenue Pierre Mendes France – 75013 – Paris.
This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material.