Wealth Strategies
Coutts Joins CO2 Divestment Trend

Activists are putting pressure on bank clients and others to lobby lenders into stopping support for carbon-based energy production.
Coutts announced
yesterday that it has targeted a 25 per cent cut in carbon
emissions in its funds and portfolios by the end of 2021.
According to its newly launched 2020 Sustainability
Report, the UK private bank declared that it had logged a 23
per cent fall in C02 emissions from its Coutts Invest funds
during 2020. It aims to reduce such emissions by half across its
holdings by 2030.
The UK bank said that it has excluded four areas from its direct
investments: thermal coal extraction; thermal coal energy
generation; tar sand; arctic oil and gas exploration.
“We invest with purpose and integrity, and with a keen focus on
sustainability. It’s extremely important that we do this well.
It’s not enough to simply sit back and do nothing to make it
worse. We all have to do something tangible. Defeating climate
change, for example, isn't about what we believe, it's about what
we do,” Mohammad Kamal Syed, head of asset management at Coutts,
said.
Activists are putting pressure on bank clients and others to
lobby lenders into stopping support for carbon-based energy
production. A group called Fossil Banks has a website covering
scores of banks which it encourages clients to contact. The group
says it is co-ordinating with organisations such as Friends of
the Earth, The Sierra Club, and Les Amis de Terre France (Friends
of the Earth France). Such action reflects widespread calls in
academia, non-government organisations and government for public
and private sectors to phase out fossil fuels.
There is fierce political debate on how fast change can be
achieved, given the conversion costs and viability of
alternatives such as renewables and nuclear power. Not everyone
is convinced. Alex Epstein, founder of the US-based Center For
Industrial Progress, wrote a book with the controversial title
The Moral Case For Fossil Fuels. An issue for some
investors is whether such a no-coal stance means that their
portfolios will become more underweight in markets such as China,
given that the world's second-largest economy has a large sector
of coal-fired power stations, and possibly will add more.
The move is an example of how a range of wealth management firms
are trumpeting their environmental, social and governance-themed
(ESG) investment ideas. A theme has been divestment, raising the
tricky subject of what to do about assets such as oil wells and
coal mines left stranded as a result. In December last year, for
example, Credit Suisse said it was no longer providing any
financing to develop new coal-fired power plants. The European
Investment Bank announced that it would not finance fossil fuel
projects beyond 2021. In May 2019, ODDO BHF Asset Management
announced that it was excluding coal investments from all its
portfolios, equal to 12 per cent of its assets.