# British funds tell Texas: emission-cut vows matter for our reputation
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-05-12
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: British asset managers defend emissions reduction efforts
Meta Description: Man Group PLC and abrdn plc address concerns over emissions reduction commitments, facing reputational risks if not followed through.
URL: https://financedigest.com/british-funds-tell-texas-emission-cut-vows-matter-for-our-reputationhtml

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By Ross Kerber

(Reuters) – Two large British asset managers have defended their efforts to reduce emissions to Texas officials and said their firms could face reputational risks if they did not follow through on carbon-cutting commitments.

The letters from Man Group PLC and from abrdn plc, reviewed by Reuters following a public records request, are in response to a new state law in Texas that says that companies found to be boycotting the fossil fuel industry could be barred from running pension fund money in the state.

Many financial executives have [pledged to push for greenhouse gas emissions cuts](https://www.financedigest.com/citi-pledges-to-cut-emissions-for-more-sectors-including-coal.html "Citi pledges to cut emissions for more sectors including coal") by portfolio companies. But that has drawn the ire of U.S. Republicans, who say they are [imposing environmental restrictions](https://www.financedigest.com/chinas-covid-resurgence-spurs-new-curbs-foxconn-imposes-restrictions.html "China’s COVID resurgence spurs new curbs, Foxconn imposes restrictions") on borrowers outside of normal policy channels. Few major asset [managers have followed](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management") some universities in divesting from fossil fuels outright.

At stake with the new Texas law are assets including $1.4 billion that Man Group of [London runs for the Teacher Retirement](https://www.financedigest.com/athletics-farah-returns-for-london-marathon-before-likely-2023-retirement.html "Athletics-Farah returns for London Marathon before likely 2023 retirement") System of Texas, and $59.7 million the system has with abrdn of Edinburgh, formerly Standard Life Aberdeen.

Whether they can keep that money is partly up to Texas Comptroller Glenn Hegar, who in March began sending out [information requests to some 158 companies](https://www.financedigest.com/healthcare-information-systems-market-2021-global-leading-companies-analysis-revenue-trends-and-forecasts-2027.html "Healthcare Information Systems Market 2021 Global Leading Companies Analysis, Revenue, Trends and Forecasts 2027"), with responses due from this month.

The letters from Man and abrdn mark the first detailed responses from major companies to Hegar’s request that have been made public.

Both Man and abrdn wrote that they do not have firmwide restrictions against investing in [energy companies](https://www.financedigest.com/luc-remont-proposed-as-new-boss-of-french-energy-company-edf.html "Luc Remont proposed as new boss of French energy company EDF") and are not boycotting them.

Rather, asked if they committed to environmental standards beyond federal or state laws, Man and abrdn described their membership in the Net Zero [Asset Managers](https://www.financedigest.com/britains-post-brexit-asset-management-revamp-eyes-liquidity-tokenisation.html "Britain’s post-Brexit asset management revamp eyes liquidity, tokenisation") Initiative.

Signatories, including most of the [world’s top](https://www.financedigest.com/top-10-fastest-bikes-in-the-world.html "Top 10 fastest bikes in the world") fund firms, commit to pressing companies in their portfolios to achieve net zero emissions by 2050 or sooner to limit global warming.

Man and abrdn noted the effort did not require them to divest from [fossil fuels](https://www.financedigest.com/eu-approves-effective-ban-on-new-fossil-fuel-cars-from-2035.html "EU approves effective ban on new fossil fuel cars from 2035").

Instead, the companies said, they could [see their good names tarnished if they did not deliver emissions](https://www.financedigest.com/euro-7-emissions-proposals-the-sequel-europes-carmakers-dont-want-to-see.html "Euro 7 emissions proposals, the sequel Europe’s carmakers don’t want to see") cuts as the voluntary industry group seeks.

“We would be exposed to reputational risks if we do not fulfil our commitments,” abrdn wrote in the letter dated April 28.

An abrdn representative said executives were not available to comment further.

A similar letter from [Man Group sent April 19 states it could be tossed out of the initiative if it does not meet](https://www.financedigest.com/meet-chris-shalchi-the-man-democratizing-access-to-e-commerce-expertise.html "Meet Chris Shalchi, The Man Democratizing Access To E-Commerce Expertise") its goals.

This may have reputational, corporate [ratings and/or client-related consequences for Man Group](https://www.financedigest.com/credit-suisse-group-rating-downgraded-by-sp.html "Credit Suisse Group rating downgraded by S&P"). There are, however, no legal or direct [economic consequences of not fulfilling its commitments under the initiative,” according](https://www.financedigest.com/flood-most-damaging-peril-of-2016-causing-nearly-one-third-of-210bn-global-economic-losses-according-to-aon-catastrophe-report.html "Flood most damaging peril of 2016, causing nearly one-third of 0bn global economic losses – according to Aon catastrophe report") to the letter.

Man declined to comment further.

A spokesman for Hegar said he would not comment on the responses. The goal is to create a list of companies found to be boycotting the [fossil fuel](https://www.financedigest.com/stellantis-wont-race-to-split-electric-vehicles-from-fossil-fuel-cars.html "Stellantis won’t race to split electric vehicles from fossil fuel cars") industry by Sept. 1, said the spokesman, Kevin Lyons. Companies on the list could then be barred from running public [pension fund](https://www.financedigest.com/cash-crunch-for-british-funds-puts-regulators-under-pensions-lens.html "Cash crunch for British funds puts regulators under pensions lens") money in Texas.

(Reporting by Ross Kerber in Boston, additional reporting by Simon Jessop in London, Editing by Rosalba O’Brien)


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