Five Ways Barings is Advancing its Net Zero Goals

July 2022 – 3 min read

The transition to a low or zero-carbon economy is one of the greatest challenges, but also opportunities, of our time.

To keep global warming to no more than 1.5°C, as laid out in the Paris Agreement, emissions need to be reduced by 45% by 2030 and reach net zero by mid-century1. But at our current rate, policies are projected to result in about 2.7°C2 warming above pre-industrial levels—with 85% of actual energy consumption still coming from fossil sources3.

This could have serious impacts on the clients, colleagues and communities we serve.

At Barings, we’re committed to the pursuit of a sustainable future and believe each organization and individual has a role to play in tackling this enormous challenge.

Following the announcement of our global commitment to achieving operational net zero last year, this Net Zero Week, we look at the five key ways we’ve been advancing our net zero ambitions.

1. Renewable Energy

We’re committed to reducing the environmental footprint of our offices. Our London office uses 100% renewable electricity and green gas, and our Charlotte office is on track for the same. In fact, 80% of our global staff are expected to be working in offices with renewable energy in 2023.

We seek to employ circular economy principles in our offices globally in our efforts to reduce the emissions and waste that contribute to climate change, and we have many measures in place to try to mitigate our impact on the environment. For example, any waste food from our London and Charlotte office cafes is put into on-site bio-processors and converted into compost. We will be using this on our roof terraces and also offering it to staff and community gardens.

“Being a good steward to our environment and local communities means minimizing the impact of our corporate offices,” said Sarah Munday, Barings’ director, sustainability.

2. Operational Carbon Neutrality

In 2021, we established an internal tax on carbon, and achieved carbon neutrality in our global operations in 2021 via offset purchases. We chose The Kariba Project for our carbon offsets—an organization that protects almost 785,000 hectares of forests and wildlife on the southern shores of Lake Kariba near the Zimbabwe-Zambia border.

We know that offsetting our emissions is only a short-term solution. We’re in the process of re-shaping our business to eliminate further emissions—making us one step closer to achieving net zero in our global operations by 2030.

Barings’ Operational GHG Emissions in Tons Co2*

five-ways-barings-chart1.jpg*Data accurate at time of reporting

Progress toward our GHG reduction targets will be tracked and communicated through annual public reporting. This is in line with global reporting standards in coordination with our parent company MassMutual, which published its net zero commitment last year, aligned with Article 4.9 of the Paris Agreement.

3. Investee Engagement

When it comes to climate change, we advocate for more responsible and sustainable behavior through our stewardship activities.

For example, through Climate Action 100+, we collaboratively engaged with an oil and gas company to strengthen its commitments to lower carbon emissions. While the company had short to medium-term targets in place, there had been a lack of disclosure on a long-term target beyond 2030, even though the company reportedly has emissions scenarios mapped out to 2080. Over the past 12 months, with fellow investors, we had two meetings with the company where we raised several issues related to its decarbonization strategy.

In a recently published five-year plan, the company has announced target spending of US$2.8 billion on decarbonisation (scope 1 and 2 and scope 3 progress too), which compares to US$1 billion under its previous five-year plan. While this is positive, we will continue to engage with the company to understand target setting beyond 2030, as we believe there is scope for further progress.

4. Partnering with Our Clients

We partner with our clients to understand their specific objectives and to develop solutions that meet their needs, including goals regarding emissions reductions.

For example, we are actively supporting MassMutual with their commitment to transition their general investment account to net zero by 2050, including incorporating emissions-related metrics when making allocation decisions within specific asset classes. In addition to our parent company, we have partnered with other clients to design and implement emissions-related metrics in their portfolio objectives, such as maintaining a lower carbon footprint versus benchmark or reducing emissions intensity of a portfolio versus a baseline year.

5. TCFD Report

Looking ahead, we plan to submit our first TCFD report in June 2023. This will be an important step for us as we report on and publicly disclose the risks and opportunities climate change presents to our business. We will then incorporate this information into our risk management and strategic planning processes.

1. Source: https://www.un.org/en/climatechange/net-zero-coalition
2. Source: https://www.reuters.com/business/cop/un-warns-world-set-27c-rise-todays-emissions-pledges-2021-10-26/
3. Source: BP 2021 Statistical Review of World Energy.

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