In 2024, the Liontrust Sustainable Investment team continued to take a proactive approach to engaging with companies on key sustainability challenges. This article is the first in a four-part series examining the team’s engagement initiatives, beginning with its efforts to address the urgent threat of the climate crisis. Recognising the potential for irreversible damage, we worked to encourage investee companies to adopt and accelerate credible decarbonisation strategies. The aim was to ensure that these businesses are equipped to transition in a timely, just, and profitable way, in line with the Paris Agreement target of limiting global temperature rise to 1.5°C.
Progress in 2024
Throughout 2024, we built upon our sustained engagement efforts which began in 2020. Over the course of the year, the team met with 27 companies to assess and challenge their decarbonisation strategies. In these interactions, we issued 13 specific requests for improvement relating to climate strategy and carbon emissions reductions. This was part of a broader initiative that has seen us engage with a total of 98 companies since the beginning of the project, all with the objective of pushing for science-aligned targets that ensure long-term competitiveness in a low-carbon economy.
This work reflects our belief in the value of consistent, long-term engagement, with the intention of driving meaningful change rather than relying solely on annual reporting cycles. The proactive nature of this dialogue helps companies develop more robust and accountable climate action plans.
Case study: Alcon – driving operational decarbonisation
As part of the 2024 engagement work, we held a meeting with Alcon, an American-Swiss medical device company aligned with our theme of Enabling healthier lifestyles. The discussion centred on Alcon’s climate targets and the credibility of its strategy for achieving emissions reductions.
Alcon has committed to becoming carbon neutral for its direct emissions (Scope 1 and 2) by 2030. To support this goal, the company has implemented more than 140 energy efficiency programmes and is working to procure 100% renewable electricity across key regions. In the United States, this target is already being met through virtual power purchase agreements, while in Europe and Asia, the company is investing in on-site solar installations.
We also learned about Alcon’s development of a new software tool designed to track emissions across its supply chain, signalling a strong step forward in addressing Scope 3 emissions. Although the company has not yet committed to joining the Science Based Targets initiative (SBTi), it has indicated that it is open to doing so in the future.
Overall, we were reassured by Alcon’s progress and commitment to climate action. The company's management quality rating was maintained, as was its position within the SF Funds, with a commitment to continue engagement in 2025.
Case study: DNB Bank – balancing transition and energy security
Another notable engagement in 2024 involved discussions with the group sustainability team at DNB Bank – a company held under our Financing housing theme. The focus was on the bank’s exposure to the oil and gas sector, the robustness of its climate targets, and how these targets are shaped by regional economic and political realities.
DNB shared that over the past decade it has significantly reduced its exposure to oil and gas, with related loans declining from approximately $20 billion to $7 billion – now representing just 4% of its total loan book. The bank has set a target to reduce its total commitments to upstream oil and gas by 18% between 2019 and 2030. With a 14% reduction already achieved, the remaining goal appears attainable, though the bank remains mindful of its role in maintaining energy security for the European Union and Norway, especially following geopolitical disruptions such as the war in Ukraine.
Beyond fossil fuels, the bank is targeting a 47% reduction in emissions intensity within its mortgage book by 2030, focused on Scope 1 and 2 emissions. The team recognised that this is a particularly ambitious target, requiring coordinated action from stakeholders across the housing and finance sectors to support homeowners in upgrading the energy efficiency of their properties. DNB is also leading within the shipping sector, with targets that outperform the Poseidon Principles, an industry framework for climate-aligned shipping finance.
We were impressed by the sophistication and transparency of DNB’s climate approach, especially in the context of operating within a national economy where a quarter of GDP is tied to oil and gas. The engagement reinforced our conviction in DNB’s sustainability leadership and its suitability as a long-term holding.
2025 engagement
Building on the momentum of 2024, the team has set clear goals for the year. Engagement efforts prioritise 30 companies where climate change poses the most significant risk to business operations and long-term value. These companies alone account for more than half of the total emissions across the Liontrust Sustainable Future Funds, making them a critical focus for accelerating impact.
In addition to deepening decarbonisation engagement, we will continue to advocate for more companies to align with the Paris Agreement’s emissions reduction pathway. Dialogue with financial institutions will also remain a priority, particularly in encouraging banks to play a more constructive role in financing the net-zero transition. We will continue to track and disclose progress against the Net Zero Asset Managers initiative (NZAMi), reinforcing its commitment to transparency and accountability in delivering climate outcomes across its portfolios. The NZAMi target for all Liontrust Sustainable Future Funds is to have 25% less direct emissions by 2025 and 50% less emissions by 2030 as compared to their mainstream benchmarks at the end of 2019. As at the 31st December 2024, all the Liontrust Sustainable Future funds have significantly exceeded this 2025 target and most have already met or exceeded the 2030 target.
Conclusion
Our engagement with investee companies highlights the value of long-term, targeted dialogue in driving real climate action. Through thoughtful, firm, and data-driven engagement, the team is helping companies navigate the complex transition to a low-carbon future while safeguarding financial performance and social impact. Over 2025, the focus is on scaling these efforts further, supporting companies most exposed to climate risk, and holding them accountable to credible decarbonisation pathways.
KEY RISKS
Past performance does not predict future returns. You may get back less than you originally invested.
We recommend this fund is held long term (minimum period of 5 years). We recommend that you hold this fund as part of a diversified portfolio of investments.
The Funds managed by the Sustainable Investment team:
- Are expected to conform to our social and environmental criteria.
- May hold overseas investments that may carry a higher currency risk. They are valued by reference to their local currency which may move up or down when compared to the currency of a Fund.
- May invest in smaller companies and may invest a small proportion (less than 10%) of the Fund in unlisted securities. There may be liquidity constraints in these securities from time to time, i.e. in certain circumstances, the fund may not be able to sell a position for full value or at all in the short term. This may affect performance and could cause the fund to defer or suspend redemptions of its shares. May invest in companies listed on the Alternative Investment Market (AIM) which is primarily for emerging or smaller companies. The rules are less demanding than those of the official List of the London Stock Exchange and therefore companies listed on AIM may carry a greater risk than a company with a full listing.
- May encounter liquidity constraints from time to time. The spread between the price you buy and sell shares will reflect the less liquid nature of the underlying holdings.
- May invest in companies predominantly in a single country which maybe subject to greater political, social and economic risks which could result in greater volatility than investments in more broadly diversified funds.
- Outside of normal conditions, may hold higher levels of cash which may be deposited with several credit counterparties (e.g. international banks). A credit risk arises should one or more of these counterparties be unable to return the deposited cash.
The risks detailed above are reflective of the full range of Funds managed by the Sustainable Investment team and not all of the risks listed are applicable to each individual Fund. For the risks associated with an individual Fund, please refer to its Key Investor Information Document (KIID)/PRIIP KID.
The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
DISCLAIMER
This material is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.
It should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets.
This information and analysis is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
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