- Ninety One CEO Hendrik du Toit says the asset manager will be signing the net-zero asset managers pledge.
- Through the pledge, asset managers commit to investing in a way that will support the goal of net-zero carbon emissions by 2050 or sooner.
- However, Du Toit says the world cannot just switch off funding taps to existing coal mines.
Ninety One CEO Hendrik du Toit says a complete exclusion of coal and other fossil fuels in asset managers' portfolios is a drastic step, especially in emerging markets where a just transition to clean energies is essential to keep economies going.
Ninety One does not finance energy projects, but it plays a critical role in making funds available to energy companies by investing in their stocks as an asset management company. Environmental activists have been calling asset managers and pension funds to play their role in transitioning the world to cleaner energy sources by voting against fossil fuels with their wallets.
Du Toit said Ninety One will be signing the net-zero asset managers pledge where companies commit to investing in a way that will support the goal of net-zero carbon emissions by 2050 or sooner. But, the former Investec asset management business will be advocating for a "fair transition", he said.
"A transition to net-zero that is inclusive and takes account of the many challenges in the real economy across countries and sectors," said Du Toit.
The CEO said Ninety One has adopted a "clear" policy on investing in companies that deal with coal and other big carbon emitters. But its policy does not exclude any particular fossil fuel because he thought the best way to get companies to reduce or offset their emissions was to engage them about their transition plans.
"Obviously we would be reluctant to back new coal, but if we exclude existing businesses, they may end up in private hands, far away where people care less about the environmental consequences," said Du Toit.
For instance, if everyone pulled out their investments from existing mines, the biggest risk the country would have to deal with is the closure of those mines and illegal miners moving in. The result would be mass job losses and highly impoverished communities while someone else continues to mine the coal illegally.
"From Ninety One's point of view, a responsible transition, sensitive to community needs but still aiming for an ambitious goal of a 2050 net-zero world is what it's all about," he added.
So, Ninety One has requested transition plans from all the companies it invests in and what it wants to see is a credible plan, said Du Toit. He said he thinks businesses save no carbon emissions if they just close down and kick employees out. But if they run certain operations down for cash and then use those proceeds to invest in cleaner energies, then the world will move closer to net-zero carbon emissions sooner.
"If someone comes with a new listing to raise money to go start a new coal mine somewhere, of course, we won't participate.
"But what we are saying is that if Anglo spins off its coal, it's not cleaning the world; it's cleaning Anglo's annual report. It's reporting less carbon as Anglo, but the new business is still there, and it's still emitting," said Du Toit made.
He said the idea that the asset management industry can create a green world by supporting only companies with no carbon emissions while ditching polluters would create polarized markets. Everyone would go for technology and other stocks and ignores the emerging markets that desperately need capital to better the lives of the 80% of the world's population that lives there.
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