Many years of expertise in sustainability

Raiffeisen Kapitalanlage-Gesellschaft (acting under the umbrella brand Raiffeisen Capital Management) has a long and extremely successful track record in the field of sustainable investment. The company has a multi-dimensional understanding of sustainability, which also embraces social aspects, along with environment ones.

Time is of the essence, as evidenced by the data on climate change published in the recent past, which show that a veritable climate crisis is occurring, as confirmed by many climate researchers.

Bearing this in mind, we want to reinforce and expand our commitment to supporting the decarbonisation of the economy, in a new climate strategy. The elaboration of a climate strategy is closely linked to the analysis of the issues of climate risks and climate opportunities. From both a sustainability and a financial perspective, opportunities can be exploited and risks avoided, by taking suitable measures at the company level, and in particular in relation to the portfolios we manage. Raiffeisen Capital Management’s first definition of climate targets occurred several years ago, in 2017. Following intensive study of the data sets and after many years of development work, a new climate strategy was adopted in 2022. This ambitious set of targets contains reduction goals over three time periods, running until 2025, until 2030, and finally until 2050.

Net Zero Asset Manager

Raiffeisen Capital Management is currently the only Austrian asset manager that is a signatory to the Net Zero Asset Managers initiative (NZAM), which it joined in December 2022. This initiative is an international group of asset managers committed to supporting the goal of net zero emissions by 2050. At present, Net Zero Asset Managers initiative has 301 signatories managing an investment volume of USD 59 trillion. By achieving the goal of net zero emissions within just under 30 years, global warming should be limited to the 1.5 °C target, in accordance with the Paris Agreement. Moreover, the intention is to support a fair transition to a climate-neutral economy. On the way to achieving a healthy, green, fair future no one is to be left behind, according to Frans Timmermans, Executive Vice-President of the European Commission.

One key precondition for formulating targets is the ability to measure them and the actual ability to influence them. In line with this, the assets included in the climate strategy initially consist of the so-called “assets in scope”, i.e. all equities holdings and corporate bonds in the retail funds managed by Raiffeisen Capital Management itself. The year 2019 was taken as the base year for calculations. Consequently, the volume covered amounts to around 21% of the overall assets managed by Raiffeisen Capital Management. The following in particular are not included: government bonds, investments in derivatives and assets in the funds of other asset management companies, as well as assets managed according specific client requirements or by third parties in the form of delegated management. Double counting is avoided. The commitment can be expanded at any time and – based on the availability of suitable data – is a topic for the medium-term future.

Based on the limited availability of reliable data, the scope of the carbon emissions covered by the sub-targets for 2025 and 2030 initially covers Scope 1 and Scope 2 emissions. Scope 3 figures will be reported based on the current limitations in data availability and quality, but they do not constitute part of the current agreement on targets.

With regard to Raiffeisen Capital Management’s commitment to achieve climate neutrality by 2050, it takes a broader approach in terms of the coverage of greenhouse gases. The inclusion of all emissions categories cannot currently be presented due to inadequate data availability. ISS ESG is Raiffeisen Capital Management’s partner for the calculation of emissions targets, as this sustainability research agency has a comprehensive database of emissions.

In principle, greenhouse gas emissions are assigned to three categories according to the Greenhouse Gas Protocol:

• Scope 1 pertains to all of a company’s direct emissions.

• Scope 2 consists of indirect emissions from the generation of purchased energy.

• Scope 3 covers the emissions that occur in the upstream and downstream value chain.

Well on the way

Raiffeisen Capital Management undertakes to reduce its emissions intensity compared to 2019 as the base year. This means that even in the last two years it has been possible to make some initial calculations on the development of the portfolio’s emissions intensity. The analyses of the first data for 2021 and 2022 show that we are well on the way to achieving the intermediate targets for 2025 and 2030. With regard to climate protection, the portfolios are also on the right track as the past months and years have been marked by strong movement towards a holistic ESG asset management approach at Raiffeisen Capital Management. Two of the key components on this path have been the following: on the one hand, the product range has been further developed to incorporate a clear focus on ESG targets, and on the other hand, the increasingly low-emissions approach has been supported by taking into consideration corporate risks and opportunities in the selection of the invested equities and corporate bonds in the portfolios. This allows for the strategic portfolio management to be easily adjusted to ultimately achieve the net zero targets for 2050, using the climate data.

Shareholder engagement goals

In addition to the emissions targets, Raiffeisen Capital Management’s climate strategy and commitment as part of its NZAM membership also include a shareholder engagement goal. For us, shareholder engagement means active contact with companies and emitters via corporate dialogue and the exercise of voting rights. In addition to gaining a better general understanding of the company, the goal is mainly to work towards convincing the company to improve corporate social responsibility and sustainability at the corporate level. Corporate dialogues have been an important part of the sustainable investment process at Raiffeisen Capital Management in recent years.

Specifically, the shareholder engagement goal embedded in the climate strategy includes dialogue with the 20 biggest greenhouse gas emitters in the corporate sphere. The focus is on companies that have either not yet formulated an obligation in relation to the Paris climate targets or belong to the 20 largest greenhouse gas emitters in the portfolio. The goal of the dialogue with these companies is to work in support of commitments and transparency. Specifically, in the shareholder engagement process, the goal is to influence the 20 companies to either make a commitment to the Paris climate targets, to comply with these targets (and the related intermediate targets), or to significantly reduce their greenhouse gas emissions. One part of the process is to define specific goals for each company, which may be related to the general decarbonisation strategy or the allocation of investments in renewable energy. These goals are communicated to the companies, and in another step the achievement of the goals is quantified.