Net Zero Investment Consultants Initiative (NZICI)

A client of Hymans Robertson wanted to set an ambitious net zero target and develop a net zero focused strategy suitable for their fund. To support this, Hymans Robertson delivered a net zero training workshop with several of the fund’s stakeholders, helping the client to frame their initial thinking and understand the implications of potential target dates.

Following the workshop, Hymans Robertson used its net zero model portfolio work to help the client to take a more granular approach to constructing its net zero focused portfolio which took into consideration exposure to different asset classes, as well as examining the various best-in class funds within that asset class’s investment universe.

Outcome:
The outcome of this analysis was that the client had a better understanding of how to achieve a balance of risk, return, and real economy decarbonisation. While faster portfolio decarbonisation is possible in some asset classes – notably listed equities, in which this client has over 50% of their assets – net zero is about real world change. Through the model portfolio work, Hymans Robertson was able to demonstrate to its client the potential impacts of these decisions.

The use of model portfolios provided direction to the client on the development of their approach to net zero. In particular, the model portfolios helped to highlight the role that natural capital could play in achieving the client’s net zero ambitions. The model portfolios also supported the client to identify the limitations of a very ambitious target and potential unintended consequences.

Adapted from UK Stewardship code, Hymans Robertson (p11)

One of the requirements of the new Australian Sustainability Reporting Standards is the inclusion of climate scenario analysis in disclosure. Frontier has assisted an increasing number of clients seeking general information about climate scenario analysis, as well as helping clients to understand what they are required to provide under the Standards and how Frontier’s climate change module fits into the overall picture.

While reporting entities face specific requirements relating to climate scenario analysis disclosure (for example, at least two temperature scenarios are required to be analysed and disclosed), they should also be able to demonstrate that scenario analysis has been applied in an effort to understand potentially material climate risks in a practical sense.

A typical reader of climate reports should be able to grasp what the potentially material impacts are to the entity’s operations and/or portfolios (the latter of which is Frontier’s focus) under different temperature scenarios. Frontier recognises that this is not necessarily a straightforward undertaking and, when engaging with clients on the topic, Frontier encourages them to approach climate scenario analysis in an authentic manner which aligns with the rationale for including such analysis in the Standards (i.e. to enable stakeholders to make informed decisions on the entity in relation to climate).

In Frontier’s engagements with clients, they provide information on:

• climate change scenarios modules;
• the source of data (e.g. gross domestic product (GDP) forecasts provided by Network for Greening the Financial System);
• how clients might approach the selection of relevant scenarios;
• interpreting the forecasted impacts on portfolios.

In some instances, Frontier has engaged with a client and their chosen provider of climate scenario analysis to discuss how scenarios might interact with capital market assumptions. Frontier recognises that clients may seek to utilise various external service providers and that assisting clients to coordinate between them is valuable to them. For larger clients, this is an expected dynamic going forward.

Frontier is evolving and enhancing its climate change module as it continues to engage with clients on the topic. Frontier views this as a key tool supporting clients to engage in a more authentic way with climate change as an investment risk and a catalyst to drive ambition in establishing net zero targets and strategies going forward.

Adapted from The Net Zero Investment Consultants Initiative – Frontier Advisors Annual Report (p8)

A sophisticated impact investor sought to allocate capital to impact infrastructure, with a strong focus on outcomes related to climate and energy transition. The client wanted a clear understanding of the market landscape across both debt and equity strategies, including the depth of the manager universe, the range of available impact themes and how these aligned with the specific investment parameters. In addition, the client needed support in identifying, assessing and selecting suitable managers to implement their strategy.

To address the client’s objectives, bfinance began an in-depth market mapping exercise across debt, equity and hybrid strategies in the climate impact infrastructure space. A request for information (RFI) was launched through bfinance’s online platform and global network, supported by a comprehensive questionnaire developed in collaboration with the client. The resulting landscaping report offered a nuanced view of the market, including risk and return characteristics, geographic focus and types of impact generated. The team conducted a multi-stage selection process to identify the most suitable managers. Each manager underwent rigorous due diligence, incorporating their standard investment assessment alongside their proprietary environmental, social and governance (ESG) and impact evaluation frameworks. This approach ensured a holistic appraisal of both financial performance potential and impact integrity.

Outcome
The client implemented a successful allocation of $80 million to climate impact investments. The process provided the client with confidence not only in the quality of the underlying managers but also in the depth and maturity of the climate impact infrastructure market. The result was a portfolio aligned with the client’s dual objectives of achieving measurable environmental outcomes and delivering strong, risk-adjusted financial returns.

Adapted from 2025 report, Net Zero Investment Consultants Initiative, bfinance (p5)

In 2023, Barnett Waddingham’s Fiduciary Management Evaluate (FME) undertook a deep-dive review of fiduciary managers’ (FM) liability driven investment (LDI) capabilities. The team engaged with FMs to feed back the findings of their review and, where relevant, engaged with managers on areas of concern.

The review highlighted some issues regarding the LDI capabilities of some FMs. Such issues posed a risk to Barnett Waddingham’s clients given the high exposure to LDI for many defined benefit pension schemes and the high level of operational governance required to manage an LDI portfolio.

In one instance, the FME team downgraded their view of a certain FM’s (“Manager A”) LDI capabilities to the lowest rating (Low Conviction). The team had some material concerns related to:

• Manager A’s approach to implementing LDI portfolios for clients, including the use of numerous external managers for their pooled LDI strategies, with significant exposure to one manager in particular about which the team had material reservations;
• Manager A’s approach to designing LDI portfolios and their ability to accurately derive a liability benchmark, as Barnett Waddingham believed Manager A’s approach was simplistic relative to other FMs;
• The experience of Manager A’s LDI team.

After feeding back the concerns, Manager A took the following actions:

1. Set in place formal procedures and policy documents to evidence how it had specifically addressed Barnett Waddingham’s concerns.
2. Reduced the number of LDI managers, and no longer uses the manager that the Barnett Waddingham team had reservations about. Manager A now has preferential arrangements in place with managers that Barnett Waddingham rate highly for their LDI capabilities.
3. Invested in its cashflow modelling capabilities, including making an experienced hire to set up a more detailed cashflow modelling process.

In light of these developments, the Barnett Waddingham team has upgraded its view of Manager A’s LDI capabilities to the middle rating (Acceptable). Barnett Waddingham continues to engage with Manager A on areas in which it lags its peers and best practice, and where it falls short of Barnett Waddingham’s highest rating (High Conviction).

Adapted from Barnett Waddingham sustainability report 2025 (p30)

JANA supported a large client in undertaking research to ensure that its investment approaches were aligned with the principles and actions set out in its Net Zero Roadmap. JANA partnered with the client on a project to review its climate approach within its passive public market equity sleeve. Being subject to Australia’s annual performance test, which measures Superannuation Funds’ performance relative to pre-determined benchmarks (Your Future Your Super (YFYS), some of the objectives of this asset class portfolio were to maintain a passive-like approach with very low cost and low turnover, minimal tracking error and minimal sector and country deviation from the regulated benchmarks.  

The client’s objective was to understand whether a focus on more forward-looking metrics could better contribute to real world decarbonisation and improve the management of climate risks and opportunities within the portfolio, compared to historical approaches that focus on past carbon emissions only.  

The desire to generate real world emissions reductions, as opposed to “paper decarbonisation” that has limited – arguably no – impact on achieving global net zero emissions, has been a common theme among JANA’s clients. It is also an area that JANA has encouraged its clients to take into consideration when establishing net zero commitments; reiterating that the objective of net zero by 2050 is to get the global economy to net zero emissions, requiring real-world, rather than portfolio, emissions decarbonisation. 

Through meeting with many investment managers and data providers to uncover their latest research initiatives in relation to real-world decarbonisation, JANA was able to uncover a number of interesting forward-looking strategies for its client’s consideration, which they will continue to explore. 

Adapted from JANA’s Net Zero Progress Report (p15)

LCP has been operationally carbon neutral (through offsets) since 2021 (for scope 1 and 2 emissions), and sources as much electricity as possible via renewable tariffs (currently over 90%). LCP measures its CO2 emissions both with and without renewable tariffs, as it knows that views of the impact of these tariffs can differ. However, LCP believes that, irrespective of how CO2 is accounted for, using renewable tariffs helps to drive and stimulate investment in the renewable energy sector.

LCP’s scope 1 and 2 emissions, on a location basis (i.e. not including the impact of renewable tariffs), have reduced by 39.6% since 2017/18. In the last year, it has reduced its scope 1 and 2 emissions by 4.2%. This demonstrates that LCP has made significant strides in reducing its emissions. LCP has also reduced its carbon intensity ratio per person by 64.9% since 2017/18.

Some of the recent actions LCP has taken include partnering with Octopus Electric Vehicles to offer Electric Dreams, a year-round available employee benefit which enables LCP staff to get an electric vehicle (EV). The Winchester office solar panels generated 21.3MWh during 2024/25 which represents 6.3% of electricity consumption for the office. Plans are in place to introduce 78 additional solar panels which will generate at least an additional 20MWh plus per year. The Edinburgh office also moved to a more energy efficient building to help reduce the impact of the growing team.

LCP has onboarded Sweep as a carbon monitoring and intelligence tool to enhance its ability to understand and report on scope 3 emissions, so that it can make more informed business decisions, and to enable it to set and achieve reduction targets across all scopes of emission.

Adapted from LCP’s NZICI report (p9)

XPS Group is committed to achieving net zero by 2050. In December 2023, XPS Group officially submitted a letter of commitment to the Science Based Targets initiative (SBTi) and in 2025, SBTi verified XPS’s near-term climate targets (up to and including 2035).

In 2024, XPS made ongoing progress on its net zero commitment. It continued to successfully decouple business growth and carbon emissions, achieving a consistent year-on-year reduction in the group’s financial and employee carbon intensity ratio (between 2019 and 2025). Currently, 88% of XPS facilities are supplied with Renewable Energy Guarantees of Origin (REGO)-backed renewable energy, which provides renewable electricity to 69% of its offices. XPS continues to drive down energy consumption with internal projects such transitioning its portfolio to 100% LED or low-energy lighting by December 2026; the group has already successfully transitioned 75% and will press on with the transition ahead of the 2026 target.

Adapted from XPS Group’s NZICI progress report (p6)

Redington, a Gallagher Company, is a member of the Investment Consultants Sustainability Working Group (ICSWG), which brings together leading UK investment consulting firms to improve sustainable investment practices across the investment industry. To support this, in 2021 the ICSWG produced a competency framework to help asset owners assess their consultants’ climate-related investment advice capabilities.

This framework was produced when such advice was relatively nascent. The industry has progressed significantly over the past few years, meaning best practice has also evolved. As a result, Redington worked with other ICSWG members in 2024 to update the competency framework. In this updated version, several aspects that were previously aspirational are now generally considered a core part of investment consultants’ offerings.

The updated framework also aims better to reflect investment consultants’ important roles in supporting asset owners in keeping abreast of the evolving landscape and the complex interplay of climate competency with related environmental/natural and social factors. It helps to raise the bar for the investment industry, promoting continuous improvement.

Adapted from Redington, a Gallagher Company’s Sustainable Investment and Impact report (p8)