Our platform invests directly in and finances buildings and infrastructure that play a crucial role in shaping our evolving society and economy.
We recognise the unconstrained delivery of buildings and infrastructure has been a major contributor to the climate crisis. Direct emissions from buildings, power and transport are responsible for 60 per cent of UK emissions, with emissions from supporting industries further exacerbating the problem. The climate crisis now presents catastrophic risks for our clients and society.
In our commitment to achieving net zero in real assets, we outline the actions we will take to invest in low-carbon solutions and decarbonise existing assets across our portfolio. Through these actions, we will protect our clients’ interests, and reduce the negative impacts of our investments on our shared environment and society.
Our commitment to our clients
We will support our clients to transition their real asset investments to net zero emissions by 2040
This means we will support our clients to reduce greenhouse gas emissions from their directly owned and financed real asset investments in line with limiting warming to 1.5 degrees. By 2040, we will support our clients to balance any remaining emissions by offering financing or direct ownership of carbon removals, such as forestry or carbon credits. Our commitment extends to client assets across our real assets platform, comprised of real estate, infrastructure, and private debt.
The scope of this net zero pathway extends to direct investments, our directly owned and managed real asset equity assets, and financed emissions, which are loans and other debt instruments made to third parties.
Our commitment will be delivered through a series of short-term investment goals, set on a rolling five-year basis. Our 2025 goals incorporate activity that has taken place this year in advance of our public commitment.
Our progress to date
We have already made significant progress towards these goals through our activity in 2020 and historic investment and asset management initiatives. Over the past five years we have invested £500 million every year in low-carbon and renewable energy infrastructure including solar, wind and energy centres. This takes our total energy generation capacity to 730 mega watts in the UK and Europe, enough to power one million homes.
Our sustainable lending strategy was launched in 2020 through £200 million of climate transition-focused debt investments in utilities and real estate. In real estate, our smart buildings programme has delivered over £1.8 million in avoided energy costs for occupiers, and contributed to a 62 per cent reduction in carbon emissions over a five-year period since 2015.
Our investment goals and the strategy to deliver them are outlined in our commitment document, Our path to net zero. The pathway covers the entire real assets platform, focusing on origination, asset management and stakeholder engagement. As well as tackling real estate and infrastructure, the commitment extends into private debt, an area where ESG integration and alignment with climate transition strategies has traditionally been viewed as complex.
The net zero commitment complements our announcement in October 2020 to invest £3.5 billion every year in real assets in the UK and a further €5 billion in Europe over the next three years. At least £500 million of this investment will be in low-carbon or renewable assets, with the remaining invested in transition focused assets such as real estate in need of energy efficiency improvements, and social infrastructure. Existing real estate assets will be decarbonised through value-add and opportunistic investing, with assets refurbished to improve their energy efficiency, rental performance and value concurrently.
Net zero pathway
This document outlines the actions we will take to invest in low-carbon solutions and decarbonise our existing portfolio in order to look after our clients’ investments and evidence how we will achieve net zero by 2040.
Sustainable transition loans framework
We are committed to reducing the carbon footprint of our portfolio and future proofing our assets against physical and transition climate risks.
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