The Financial Adviser sector took a big step forward on its path to Net Zero today with the launch of a new sector-specific tool to help advisory businesses measure, report and reduce greenhouse gas emissions.
The Net Zero Financial Advisers Initiative puts the tools for climate action in the hands of the UK’s 5000+ financial advisers and was developed by Net Zero Now, the carbon accounting and climate action platform which aims to help businesses of all sizes fight climate change and boost business success.
The UK Government has set a target for the whole economy to reach Net Zero by 2050. The launch of the new initiative includes three elements:
- An industry roadmap that sets out a standard for Net Zero against which IFAs can report and be measured
- A dedicated, sector-specific digital platform providing a complete solution for operators to calculate, report and reduce their emissions using tailored reduction plans
- The findings of a pilot of the initiative with five firms which showed an average carbon footprint of approximately 35 tonnes per year, equivalent to the emissions produced from driving a petrol car for nearly 90,000 miles.
The pilot study showed an average of 35 tonnes of greenhouse gas emissions per firm. With roughly 5,000 financial advisory firms in the UK, the sector is estimated to be responsible for about 175,000 tonnes of greenhouse gas emissions in total. By working with these businesses to set reduction targets of 30%, delivered over the next 5 years, there is an opportunity to reduce emissions by around 50,000 tonnes – equivalent to the emissions produced by over 5 million gallons of petrol.
Liontrust and Fintel, the parent company of SimplyBiz and Defaqto, are supporting the Initiative as founding development partners. They worked with Net Zero Now to develop the sector-specific roadmap to Net Zero which sits at the heart of the Initiative, with input from academics, climate experts and a pilot group of financial advisers. This roadmap is aligned with the latest global climate science, including the Science Based Targets Initiative and the Greenhouse Gas Protocol, which set standards and best practice for measuring and managing emissions .
The pilot firms – Investing Ethically, James Brewster, The Path, Herbert Scott and Mosaac Ltd – worked with Net Zero Now to undertake a full calculation of their greenhouse gas emissions, the vital first step in enabling action to reduce them. In total, the pilot firms were responsible for over 170 tonnes of emissions in 2022. Net Zero Now is working with each firm to build a tailored reduction plan and commit to specific targets. Many of the pilot firms are already taking action to reduce their emissions, with common themes including exploring energy efficiency, purchasing renewable energy and changing employee commuting methods.
Longer-term, firms participating in the Net Zero Financial Advisers Initiative will be able to report on their emissions using Net Zero Now’s platform, evidence their performance in reducing their emissions versus government benchmark figures and achieve a certification to confirm they are ‘On the Road to Net Zero’.
Neil Ross Russell, Managing Director of Net Zero Now, said: “By showing that they take the transition to a more planet-positive future seriously, these firms are leading the way for the entire sector, and our wider economy, to take action. Net Zero Now exists to fight the climate crisis and boost business success – our experience across multiple sectors shows the two go hand in hand. Financial Advisers that join this important Initiative can help attract and retain staff, reduce costs and meet the increasing demand from clients for firms aligned with their own climate commitments.”
Peter Michaelis, Head of the Liontrust Sustainable Investment team, said: “Much of the focus for decarbonisation has been on large well-resourced companies. But it is critical that smaller businesses also take action. This Net Zero Financial Advisers Initiative offers a rigorous yet simple tool that advisers can use to plan their path and measure their progress to a zero carbon world. Liontrust is delighted to have supported its development.”
Kate Kwiatkowska, Head of ESG and Corporate Marketing at Fintel, said: “As the UK pivots towards net zero, financial advisers will be a driving force in ensuring client portfolios are invested in a way that matches the client’s ESG preferences. Aside from this crucial role, many advisory firms are looking to ensure their own operating models move towards net zero. We are delighted to have been able to use our deep understanding of the advice firms we serve to help design a practical framework for financial advice firms to follow and demonstrate their net zero credentials to clients.”
Phil Cockrell, Director and Chartered Financial Planner, Investing Ethically Ltd, said: “As specialists in ethical investment, it’s important to us – and our clients – that we manage the environmental impacts of our business. We’ve been working to reduce our carbon footprint for some years now – taking steps to improve our energy efficiency, be more careful with resource use, and reduce our business mileage. We’re excited to be working with Net Zero Now, and this pilot initiative, as the next stage of improvement. In particular, we’re keen to learn more about our Scope 3 emissions, and how we might reduce these indirect parts of our carbon footprint.”