TPI in practice: Aberdeen Investments

Aberdeen Investments is an asset manager based in the United Kingdom with ~£50.9bn in AUM. This case study explains how Aberdeen use TPI data in company engagement and portfolio alignment.

Holistic sustainable investing

We have developed our sustainable investing approach, from over 30 years of experience, starting from a focus on corporate governance to the more holistic approach taken today.

Within climate integration, we have developed a suite of tools and frameworks that are integrated into our investment processes.

Our net zero alignment and credibility framework, which uses TPI data as an input, seeks to assess the alignment of portfolio companies and sovereigns to achieve net zero, along with a critical complementary lens of credibility assessment, to inform our view of the company and sovereign’s ability to meet its targets.

Real world use

• Holistic insights: in connection with assessing a company’s alignment and credibility, both the TPI Carbon Performance (CP) and Management Quality (MQ) data have been integrated into how we engage with companies. The feedback loop to these engagements is critical, as companies respond to the engagements, we seek to gradually improve their alignment and credibility to achieving climate objectives.
• Alignment: our net zero alignment and credibility framework was interestingly developed before alignment became a commonly used methodology. It was largely thanks to the granular level of TPI data across both quantitative and qualitative assessments, which enabled and inspired our thinking on the topic of credibility. Today, TPI data is complemented with a suite of other datasets but remains core to our approach.
• Credibility: The TPI CP data is specifically an input in our alignment assessment. While elements of MQ enable us to better understand credibility drivers. For example, the MQ Level 4 strategic assessment is utilised to inform our views on climate governance within our assessments of credibility. We have had successes using this granular data in engagements with companies such as SSE – which we believe are a transition leader but where we used TPI data to flag potential credibility concerns. For example, SSE has a strong MQ score of 4/4*. However, TPI identifies some gaps, particularly in how SSE ensures consistency between its public climate stance and trade association positions. The issue is significant due to the growing focus on climate lobbying related resolutions field at AGMs. SSE has addressed this concern in its 2023 CDP Questionnaire response. We have also started to expand our alignment and credibility framework to include Assessing Sovereign Climate-related Opportunities and Risks (ASCOR) data across sovereigns.