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As we move towards a more sustainable future, are your investments being made responsibly? SUSTAINABILITY REPORT 2020
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Foreword

PETER FLAVEL, Chief Executive Officer, Coutts

Each and every one of us has the power to create change. And now, more than ever, is the time to do just that. Living our purpose – to champion potential, helping people, families and businesses to thrive – is no longer a luxury, it’s a necessity, for all of society. We’ll all need to take action if we want a better future.

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TAKING RESPONSIBILITY

MOHAMMAD KAMAL SYED, HEAD OF ASSET MANAGEMENT & LESLIE GENT, HEAD OF RESPONSIBLE INVESTING, ASSET MANAGEMENT

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FIVE REASONS TO BE RESPONSIBLE

We all know having a sustainable and responsible approach to investing is important because it can build a better world – and who doesn’t want that? But here are five more specific reasons to get behind it with Coutts

You can disrupt industries for the better

You can support investment in responsible companies

We can adapt quickly when the rules change

It helps you preserve your wealth for the long term

You can take comfort in knowing we care about the future

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WHAT IS ESG?

KEY RESPONSIBLE INVESTING TERMS

Stands for
Environmental, Social and Governance
the three key categories investors use to classify the topics they address to create a sustainable future.
Here’s what each one means...

Environmental
The impact a company has on the environment.
This includes carbon emissions, deforestation, water usage and packaging.

Social
The impact a company has on society. This includes how it treats its staff, making sure supply chains avoid unethical labour practices, and the health impact of its products.

Governance
The impact a company has on the business environment. This includes its accounting practices, how it negotiates with suppliers, its attitude to diversity and how it contributes to a fair and stable market environment.

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OUR JOURNEY OF RESPONSIBILITY

WE HAVE A STRONG TRACK RECORD ON RESPONSIBLE INVESTING AND A CLEAR PLAN OF ACTION FOR THE FUTURE

 
THE BEGINNING
 
 
 
ESG factors integrated into our investment decision-making
 
 
 
 
Sir David Attenborough speaks at climate change event we host for our clients
 
Climate change action plan issued in line with Task Force on Climate-Related Financial Disclosures
 
 
 
THE FUTURE
 
 
 
 
 
 
 
Coutts Responsible Investment Forum established
 
 
 
 
 
We vote against the management of companies we invest in at 42% of meetings
 
We exclude four key areas from our direct investments:
Thermal coal extraction
Thermal coal energy generation
Tar sands
Arctic oil and gas exploration
 
 
 
 
 
 
 
 
We appoint EOS at Federated Hermes to support voting and engagement
 
 
 
 
 
Our responsible investing work achieves strong scores in UN- backed, independent assessment
 
 
 
 
 
BUSINESS TARGET:
Our business operations go beyond net zero carbon emissions and help remove CO2 from the atmosphere - ahead of government's ambition of net zero emissions by 2050
 
 
 
We start managing ethical portfolios to reflect client values
 
We start using software to improve our ethical screening
 
First Coutts Responsible Investment Policy introduced
 
We achieve the top, tier 1 rating for our Statement of Compliance with the UK Stewardship Code
 
We sign up to the United Nations Principles for Responsible Investment
 
We join carbon-cutting body Climate Action 100+
 
We reduce carbon emissions in our Coutts Invest funds by 23% on average
 
INVESTMENT TARGET:Reduce our carbon emissions by 25% by end of 2021
 
 
 
INVESTMENT TARGET:Reduce our carbon emissions by 50% by end of 2030
 
2010
 
2011
 
2016
 
2017
 
2018
 
2019
 
2020
 
2021
 
2025
 
2030
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BEHIND THE SCENES

How Coutts and its clients are making a difference

STAGE ONE: CONSIDERED DECISIONS Due diligence We carefully assess all ESG-related risks and opportunities a company or fund presents before we decide whether to invest in it.
STAGE TWO: GETTING ENGAGED Ongoing relationships We keep in constant contact with the firms and funds we hold, using our power as investors to influence their responsible behaviour.
STAGE THREE: ONGOING IMPROVEMENT Staying on top of change We work with independent strategic consultants, leading ESG groups and our own clients to ensure our approach remains relevant and effective. We review our process at least every two years.
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WHERE ARE THE GROWTH AREAS?

From plug-in CARS to plant-based food, a look at some sectors investors are watching closely as the world becomes more responsible

ARTIFICIAL
INTELLIGENCE

74% of business decision makers think AI will solve environmental challenges.

Source: Intel
PLANT-BASED
MEAT

Online interest in ‘veganism’ increased seven-fold between 2014 and 2019.

Source: The Vegan Society
PLUG-IN
CARS

The number of electric passenger cars passed five million in 2018.

Source: The International Energy Agency
RENEWABLE
ENERGY

Over 1,110 institutions have pledged to divest from fossil fuels.

Source: 350.org
GREEN
BONDS

By mid-2019, green bonds were up 48% year-on-year in terms of value.

Source: Climate Bond Initiative
Source: Intel
Source: The Vegan Society
Source: The International Energy Agency
Source: 350.org
Source: Climate Bond Initiative
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one COUTTS CLIENT, THREE QUESTIONS

How a trip to the Canadian Arctic sparked a passion for protecting the environment for Coutts client Harvey Jones

Q: What did you see on your trip that led to your passion for protecting the planet? What’s your advice to people who want to do more for the environment? What do you think about responsible investing?
A: It made me realise that man basically hunts everything. If it can move, man kills it. That, along with a love of nature I’ve had since growing up in the country, inspired me to do something for what I see as the real victim of what we’re doing to the planet – wildlife.
A: If you want to save life on earth, get yourself a piece of the earth and save the life on it. That’s the most effective investment you can make in sustainability.
A: What Coutts is doing is good because it’s carrying out the research into the companies it invests in for its clients, and taking out the worst of the market through exclusions.