Our fundamental belief is that environmental, social and governance (ESG) investing is an essential part of the solution to a sustainable future.
We see ESG investing as a strategic competitive differentiator that enables us to deliver sustainable, long-term performance to clients in ways that achieve our Purpose of helping people get more out of life. We embed the principles of ESG into our investment strategies and across our business.
As one of the largest asset managers globally, we hold a deep understanding of the complex interactions between the financial markets, business, society and the environment. Given our size and expertise, we know that we are in a unique position to encourage change and drive positive impact through our investments, engagements and dialogue with companies. Today, our clients expect us to take the lead on how ESG will reshape the investment landscape. And for the next generation of investors, ESG will be a given.
Invesco’s ESG philosophy is based on our belief that ESG factors have an impact on sustainable value creation as well as risk management, and our approach focuses on embedding ESG opportunity and risk factors into our investment decisions. In 2020 we published our position on ESG via our Statement of ESG Beliefs. This statement is signed by our CEO Marty Flanagan and Senior Managing Director of Investments, Greg McGreevey, and reiterates our focus on integrating ESG into the heart of our investment process. Read our full Statement of ESG Beliefs at invesco.com/corporate.
Each year Invesco’s global team of ESG experts publishes a report outlining our commitment to responsible investing and our recent achievements. Read the 2020 Invesco ESG Investment Stewardship Report.
Invesco is a strong advocate of responsible investing practices. Our policies, processes and overall company approach value the spirit of the Principles of Responsible Investment (PRI) and demonstrate Invesco’s commitment to stewardship.
The PRI carries out annual assessments based on how a signatory has progressed year-on-year and relative to peers. In 2020 Invesco achieved an A or A+ across all categories, and we were awarded an A+ rating for our overall approach to responsible investment (Strategy and Governance) for the fourth consecutive year. This demonstrates our extensive efforts in terms of ESG integration, active ownership, investor collaboration and transparency. Further information about PRI, their assessment methodology and Invesco’s Transparency Report can be found at unpri.org
Doing what is right for our people and the communities in which we operate helps us deliver positive outcomes for our shareholders. The far-reaching impacts of the COVID-19 pandemic highlight the persistence of social and economic inequality in the 21st century, and have forced us to take a hard look at the vulnerabilities in our local, state and national systems.
Investors can influence significant social change through responsible capital allocation and active ownership in pursuing outcomes with benefits that extend far beyond the bottom line. This further underlines the importance for us to facilitate discussion with companies on their specific responses to this situation.
As long-term investors, this is a crucial time to maintain pressure and push for real structural and institutional change, particularly in regard to health care, social support structures and gender equality. Striving for equality is about more than doing the right thing: it is also about acting in the best interests of an entity and its stakeholders—shareholders included. As asset managers, as with any element of ESG, our responsible allocation of capital can be fully aligned with our obligation to protect and grow clients’ wealth.
In 2020 the COVID-19 pandemic motivated us to help our investment teams refocus on the “S” in ESG. Core social issues such as employee welfare, access to health care, consideration of corporate culture and supply chain sustainability are all directly related to this pandemic. We are providing investors with enhanced education on such factors through our Global Investors Council ESG Subcommittee.
With many of the world’s largest companies adapting to remote working models due to the pandemic, flexible working and mental health support are increasingly important topics. Future working patterns are likely to change drastically, and corporate responses will become even more vital.
Active ownership is crucial to ensuring that the necessary organizational responses transcend mere box-checking and are genuinely geared toward the greater good. As investors, we have the opportunity to encourage policies that support diversity, equity and fair treatment at our portfolio companies. If properly devised and implemented, socially responsible solutions square moral and fiduciary duties by potentially enhancing both ESG performance and financial performance.
Invesco continues to encourage our investee companies to take the steps they can to mitigate the social impacts caused by the global pandemic. We have been engaging on these topics as part of our ongoing one-on-one ESG engagements.
In 2020 Invesco signed onto the ICCR Investor Statement on Coronavirus Response. The statement urges the business community to take any steps possible with focus on the following:
As one of the largest investors supporting the ICCR’s statement, Invesco joins more than 330 other institutional investors representing over $9.5 trillion1 in assets under management with global exposure across capital markets.
Climate change is the greatest societal and financial risk that people across the globe face. The transition to a low-carbon economy is already underway, but there is much work to do to reach net-zero greenhouse gas (GHG) emissions by 2050. We believe asset managers are uniquely positioned to make a significant impact in achieving this goal. As one of the largest asset managers in the world, we believe we can help accelerate the transition toward a global net-zero future.
That is why we have joined the global Net Zero Asset Managers Initiative—a global pledge focused on investment managers committing to reaching net-zero GHG emissions across our investment portfolios, in line with the Paris Agreement goal to limit warming to 1.5°C above pre-industrial levels. Invesco has not only pledged support to the Net Zero Asset Manager initiative, but we are also members of the Net Zero Asset Managers working group, where we will work directly with the United Nations-backed Principles for Responsible Investment (PRI), the Institutional Investors Group on Climate Change (IIGCC), CDP and other organizations alongside asset managers to develop net-zero methodologies for asset classes and foster industry standards.
This initiative is vital for the health and sustainability of our planet, but it will also be crucial to avoid the worst impacts of climate change on the investments we make on behalf of our clients. We believe that it is becoming increasingly clear that long-term valuations may be impacted if companies do not have credible low-carbon transition strategies. Using our research, analysis, climate data and Vivideconomics’s collaboration for analytical tools (such as PlanetView), we partner with our asset-owner clients to help them design net-zero goals for their portfolios and execute decarbonization strategies.
Invesco’s other climate-related initiatives and engagements include:
Our inaugural report on Climate Change published in July 2020 in line with the TCFD
Our journey toward addressing climate change started in March 2019 when we became a supporter of the Task Force for Climate-Related Financial Disclosures (TCFD). In July 2020 we published our first inaugural report on Climate Change in line with the TCFD, and since then we committed to publish an annual report with progress and further actions. The TCFD framework aligns with our belief that climate change is a strategic business issue that can impact long-term financial performance. The TCFD report presents our analysis on carbon footprint and intensity, temperature alignment and climate scenario analysis for a significant part of our listed equities and corporate fixed-income holdings. In addition to our disclosure on climate change, we offer and continue to develop climate-related investment solutions in all asset classes and influence through engagement and advocacy on climate-related actions.
Invesco’s ESG integration process includes climate-related metrics. Invesco’s propriety ESGintel already incorporates CDP, Science Based Targets and Transition Pathway data into these ESG insight signals that, in turn, are incorporated into fundamental, active investment teams across Invesco. We commit to furthering these insights specifically aligned to Net Zero. In addition to the climate-related metrics available in ESGIntel, all investment centers have access to supplemental climate data, either directly or through the ESG data team. For specific climate analytics we use a suite of climate data providers and have partnered with Vivideconomic-Planetrics to enhance our climate analytics tools, such as PlanetView, to equip all our investment teams with the ability not only to use carbon footprinting metrics but to extend their analysis to scenarios, temperature alignment and cost impairment.
Invesco will continue to expand our product suite and solutions to support Net Zero. As we continue to enhance our analytical capabilities by adding new data sets, we improve our ability to assess and manage the overall carbon footprint and scenario analysis of all our funds. Our goal to identify assets for the Net Zero pathway will be based on strong analytics and insights and be rooted in meeting our clients’ needs.
As investors, we must be part of the solution to climate change through supporting and influencing companies that are adapting, transitioning and allocating capital toward future-proofing our planet. We acknowledge the opportunity to influence company behavior in our voting for climate resolutions and will consider their merits on an individual basis. We are intensifying our targeted engagement toward achieving Net Zero. We are a leading voice in climate change engagement with our investee companies and through collective actions like Climate Action 100+, an initiative where we are a co-lead investor with one company and actively participating with seven others. Our actions have already resulted in the companies’ starting their climate disclosing journey. We will continue to contribute actively and reach out to corporations to promote and support the transition to Net Zero. We also align our voting policies to climate risk. We are investors members and active participants in policy and industry initiatives such as the World Economic Forum Investors Group on Climate Change (IIGCC) and global coalitions such as the World Economic Forum Coalition for Climate Resilient Investment.
| 2018 Invesco Score |
2019 Invesco Score |
2020 Invesco Score |
2020 Median Score |
|
|---|---|---|---|---|
| Fixed Income for Securities | F | F | B | C |
| Property | B | B | B | C |
| Strategy and Governance | A | A | A | B |
| Listed Equity for Incorporation | A | A | A | B |
| Listed Equity for Ownership | B | B | B | C |
| Fixed Income for SSA | A | B | A | C |
| Fixed Income for Corporate Financial | B | B | B | C |
| Fixed Income for Corporate Nonfinancial | B | B | A | C |
