Since joining the initiative in 2021, Fiera, one of Canada's largest asset management firms, has been forming the net-zero plan to reduce the climate impact of its assets. The company, based in Montreal, manages a range of portfolios totalling $158.3 billion of assets under management (AUM) as of September 2022.
Vincent Beaulieu, head of Fiera Capital’s sustainable investing team, said the company decided on this commitment because, “Climate change is really a top priority. We felt that embarking on that journey was a way that we can put our firm to (contributing).
"But also it’s a way that all teams can contribute. Irrespective of their asset classes, there’s something to be done around that theme, so for us, it was a strategic initiative that made a lot of sense.”
A year later and with a strategy in hand approved by the NZAM, Fiera Capital is joining other Canadian asset management firms and investment companies in efforts to stave off the worst consequences of global warming.
Fiera’s climate goals
Fiera Capital aims to align its portfolio for net-zero by 2050 and proposed an interim target for 2030 to “showcase that we are indeed aligned with that overall objective of 2050.”
The 2030 target accounts for $12.1 billion in portfolio value, or seven per cent of its AUM.
Beaulieu said Fiera Capital “didn’t want to wait before we could commit 100 per cent” to NZAM and wanted to “commit as soon as we could.” By focusing on seven per cent of its AUM, he said the company could ensure its methodologies are adequate to track its commitments.
For the public markets portfolio, Fiera Capital must meet a relative target of a 55 per cent reduction in greenhouse gases (GHGs) by 2030 from a 2019 benchmark.
“We look at what the weighted average carbon intensity of the benchmark was in 2019. We assume a 55 per cent reduction between 2019 and 2030 and that becomes our target,” he said.
The GHG target for the public markets portfolio does not entail a 55 per cent reduction in GHG absolute emissions, Beaulieu elaborated. For portfolios that are already aligned, it may require less aggressive GHG cuts. For portfolios that are less aligned now, it will require more aggressive targets.
For its infrastructure portfolio and one of its real estate portfolios, the goal is to reduce absolute emissions by 50 per cent and 70 per cent by 2030, respectively – from a baseline year of 2019.
The focus is on reducing its Scope 1 and 2 GHG emissions, and Fiera Capital plans to include Scope 3 as the data becomes more available.
How Fiera plans to reach net-zero
Fiera Capital will use a two-prong strategy to reduce its GHG emissions, according to Beaulieu.
For private markets where Fiera Capital owns a higher share of investments, he said it can influence the companies toward net-zero objectives.
In the case of publicly-traded companies, Beaulieu said engagement will be the primary force for decarbonization.
Fiera Capital will press companies it invests in to reduce their emissions and establish clear paths to net-zero, while making different investment choices across its portfolios.
For companies Fiera Capital does not own, it will participate in industry collaboration and initiatives like Climate Action 100+, an investor initiative of 166 companies totalling $92.7 trillion in assets that is pushing the world’s 100 largest GHG polluters to reach net-zero by 2050.
In its 2021 responsible investing report, Fiera Capital said it does not have "a firm-wide exclusion guideline on coal and other fossil fuels," but did offer strategies to restrict or limit exposure. Beaulieu said the exposure is spread across various mandates it manages; some have limited exposure to fossil fuels, while others are absent of fossil fuels and/or are restricted from investing in the sector.
Divestment is not “necessarily” part of the NZAM, and Beaulieu said Fiera Capital is underexposed to fossil fuels relative to benchmarks. But Fiera can engage with oil and gas companies by urging emissions reductions targets, he said.
Fiera Capital’s near-future plans
NZAM requires members to revisit their commitments every five years, but Fiera plans to revise/update it sooner because of the new decarbonization strategies it is exploring.
Fiera Capital will focus on increasing its commitment by covering more asset classes. Beaulieu said the company will focus on searching for new data points and methodologies so it can incorporate both more strategies, and more assets than are currently covered.