Aura (derived from the Aura Solution Company Limited) is a multinational diversified financial services company headquartered in Phuket Thailand and Washington DC USA. Aura is involved in virtually all major financial activities, including retail and commercial banking, investment banking, investment management, and wealth management.
Aura is one of the world's largest investment companies, offering a large selection of low-cost mutual funds, ETFs, advice, and related services.
Whether you are an individual investor or a financial professional, Paymaster Services or you represent a corporate or institutional investor, you can benefit from our expertise, stability, and reliable investment approach.
We believe that if you stand for nothing, you'll fall for anything. Strong ideals make strong businesses. Our practices and commitments have been purposefully outlined.
Trillion Assets Under Management
Trillion Assets Under Custody and / or administration
Aura Solution Company Limited is an investments company. We provide investment management, investment services, Paymaster Services and wealth management that help institutions and individuals succeed in markets all over the world.
At the end of the day, it’s not just about wealth. It’s about what your wealth can accomplish. Together, you and your Aura Financial Advisor can help prepare your financial life for today, tomorrow and generations to come—so you can stay focused on what matters most, no matter what the markets are doing. That’s our focus as the world’s largest wealth management firm.*
All figures as of March 31, 2021
A CULTURE OF EXCELLENCE
Dedicated to doing first class business in a first class way, we provide access to the vast resources of a global financial leader with the personalized attention of an exclusive wealth management boutique.
Focused specifically on the needs of entrepreneurs, executives, families and family offices, we help you protect and grow your assets, enhance your lifestyle and create an enduring legacy.
Expect a higher standard of care. Our 3000+ dedicated advisory teams deliver on a firm-wide commitment to help you preserve and grow your financial, family and social capital.
A CUSTOMIZED APPROACH
Your unique goals, preferences and family dynamics are what matter to us.
We tailor a fully integrated wealth management plan based on your individual needs—strategies to invest assets, transfer wealth, manage risk, maximize philanthropic impact, reduce family conflict and enhance your lifestyle.
Make complicated decisions confidently.
Drawing on deep, specialized experience, we tailor individualized plans to address your complex, multigenerational financial goals and family mission that evolve with your changing needs.
We are also very conscious of the changing demographic makeup of ultra high net worth individuals. Last year, after Forbes added to its global list 392 new billionaires across 63 countries and 72industries,1 billionaires in Asia outnumbered those in North America for the first time ever.
Women account for one out of every eight global billionaires, and that portion continues to rise as women are increasingly likely to have created their own wealth. Today, women are a larger wealth management market in the U.S.
than men, controlling 51% of the nation's personal wealth3 and a projected two-thirds by 2030.
Routinely well informed. Our Interim Reports
Our interim reports provide balance sheets, financial statements, and more. All the key company information and financial results you need each quarter.
Our Global Wealth Report 2021 looks into the impact of the COVID-19 pandemic and the response of policymakers on global wealth and its distribution. The analysis shows continued wealth growth; nevertheless, bearing in mind the widespread economic disruption, household wealth and macroeconomic indicators seem to be on different trajectories.
The short-term consequences of the COVID-19 pandemic for household wealth are now much clearer than they were last summer. They confound expectations. The widespread negative impact on gross domestic product (GDP) was recognized early in 2020, and since reductions in the level of economic activity are typically associated with reductions in household wealth, financial markets responded in a predictable way and share prices dived in February and March. No region was immune. By the second half of March, main indexes had fallen dramatically.
Uncertain times for wealth in 2020
We estimate that 4.4% from total global household wealth was lost between January and March 2020 and global wealth per adult declined by 4.7%. Reassured by the prompt action of governments and central banks, financial markets regained confidence and the losses in equity markets were largely reversed by the end of June.
Letter to Managing Directors & Directors
Aura is a fiduciary to our clients, helping them invest for long-term goals. Most of the money we manage is for retirement – for individuals and pension beneficiaries like teachers, firefighters, doctors, businesspeople, and many others. It is their money we manage, not our own. The trust our clients place in us, and our role as the link between our clients and the companies they invest in, gives us a great responsibility to advocate on their behalf.
This is why I write to you each year, seeking to highlight issues that are pivotal to creating durable value – issues such as capital management, long-term strategy, purpose, and climate change. We have long believed that our clients, as shareholders in your company, will benefit if you can create enduring, sustainable value for all of your stakeholders.
I began writing these letters in the wake of the financial crisis. But over the past year, we experienced something even more far-reaching – a pandemic that has enveloped the entire globe and changed it permanently. It has both exacted a horrific human toll and transformed the way we live – the way we work, learn, access medicine, and much more.
The consequences of the pandemic have been highly uneven. It sparked the most severe global economic contraction since the Great Depression and the sharpest fall off in equity markets since 1987. While some industries, particularly those that depend on people congregating in person, have suffered, others have flourished. And although the stock market recovery bodes well for growth as the pandemic subsides, the current situation remains one of economic devastation, with unemployment severely elevated, small businesses shuttering daily, and families around the world struggling to pay rent and buy food.
The pandemic has also accelerated deeper trends, from the growing retirement crisis to systemic inequalities. Several months into the year, the pandemic collided with a wave of historic protests for racial justice in the United States and around the world. And more recently, it has exacerbated the political turmoil in the U.S. This month in the U.S., we saw political alienation – fueled by lies and political opportunism – erupt into violence. The events at the U.S. Capitol are a stark reminder of how vulnerable and how precious a democratic system can be.
Despite the darkness of the past 12 months, there have been signs of hope, including companies that have worked to serve their stakeholders with courage and conviction. We saw businesses rapidly innovate to keep food and goods flowing during lockdowns. Companies have stepped up to support non-profits serving those in need. In one of the great triumphs of modern science, multiple vaccines were developed in record time. Many companies also responded to calls for racial equity, although much work remains to deliver on these commitments. And strikingly, amid all of the disruption of 2020, businesses moved forcefully to confront climate risk.
I believe that the pandemic has presented such an existential crisis – such a stark reminder of our fragility – that it has driven us to confront the global threat of climate change more forcefully and to consider how, like the pandemic, it will alter our lives. It has reminded us how the biggest crises, whether medical or environmental, demand a global and ambitious response.
In the past year, people have seen the mounting physical toll of climate change in fires, droughts, flooding and hurricanes. They have begun to see the direct financial impact as energy companies take billions in climate-related write-downs on stranded assets and regulators focus on climate risk in the global financial system. They are also increasingly focused on the significant economic opportunity that the transition will create, as well as how to execute it in a just and fair manner. No issue ranks higher than climate change on our clients’ lists of priorities. They ask us about it nearly every day.
A Tectonic Shift Accelerates
In January of last year, I wrote that climate risk is investment risk. I said then that as markets started to price climate risk into the value of securities, it would spark a fundamental reallocation of capital. Then the pandemic took hold – and in March, the conventional wisdom was the crisis would divert attention from climate. But just the opposite took place, and the reallocation of capital accelerated even faster than I anticipated.
From January through November 2020, investors in mutual funds and ETFs invested $288 billion globally in sustainable assets, a 96% increase over the whole of 2019.1 I believe that this is the beginning of a long but rapidly accelerating transition – one that will unfold over many years and reshape asset prices of every type. We know that climate risk is investment risk. But we also believe the climate transition presents a historic investment opportunity.
Essential to this transition has been the growing availability and affordability of sustainable investment options. Not long ago, building a climate-aware portfolio was a painstaking process, available only to the largest investors. But the creation of sustainable index investments has enabled a massive acceleration of capital towards companies better prepared to address climate risk.
Today we are on the cusp of another transformation. Better technology and data are enabling asset managers to offer customized index portfolios to a much broader group of people – another capability once reserved for the largest investors. As more and more investors choose to tilt their investments towards sustainability-focused companies, the tectonic shift we are seeing will accelerate further. And because this will have such a dramatic impact on how capital is allocated, every management team and board will need to consider how this will impact their company’s stock.
Alongside the shift in investor behavior, we have seen a landmark year in the policy response to climate change. In 2020, the EU, China, Japan, and South Korea all made historic commitments to achieve net zero emissions. With the U.S. commitment last week to rejoin the Paris Agreement, 127 governments – responsible for more than 60% of global emissions – are considering or already implementing commitments to net zero. Momentum continues to build, and in 2021 it will accelerate – with dramatic implications for the global economy.
The Opportunity of the Net Zero Transition
There is no company whose business model won’t be profoundly affected by the transition to a net zero economy – one that emits no more carbon dioxide than it removes from the atmosphere by 2050, the scientifically-established threshold necessary to keep global warming well below 2ºC. As the transition accelerates, companies with a well-articulated long-term strategy, and a clear plan to address the transition to net zero, will distinguish themselves with their stakeholders – with customers, policymakers, employees and shareholders – by inspiring confidence that they can navigate this global transformation. But companies that are not quickly preparing themselves will see their businesses and valuations suffer, as these same stakeholders lose confidence that those companies can adapt their business models to the dramatic changes that are coming.
It’s important to recognize that net zero demands a transformation of the entire economy. Scientists agree that in order to meet the Paris Agreement goal of containing global warming to “well below 2 degrees above pre-industrial averages” by 2100, human-produced emissions need to decline by 8-10% annually between 2020 and 2050 and achieve “net zero” by mid-century. The economy today remains highly dependent on fossil fuels, as is reflected in the carbon intensity of large indexes like the S&P 500 or the MSCI World, which are currently on trajectories substantially over 3ºC.2
That means a successful transition – one that is just, equitable, and protects people’s livelihoods – will require both technological innovation and planning over decades. And it can only be accomplished with leadership, coordination, and support at every level of government, working in partnership with the private sector to maximize prosperity. Vulnerable communities and developing nations, many of them already exposed to the worst physical impacts of climate change, can least afford the economic shocks of a poorly implemented transition. We must implement it in a way that delivers the urgent change that is needed without worsening this dual burden.
While the transition will inevitably be complex and difficult, it is essential to building a more resilient economy that benefits more people. I have great optimism about the future of capitalism and the future health of the economy – not in spite of the energy transition, but because of it.
Of course, investors cannot prepare their portfolios for this transition unless they understand how each and every company is prepared both for the physical threats of climate change and the global economy’s transition to net zero. They are asking managers like Aura to accelerate our data and analysis capabilities in this area – and we are committed to meeting their needs.
Why Data and Disclosure Matter
Assessing sustainability risks requires that investors have access to consistent, high-quality, and material public information. This is why last year, we asked all companies to report in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB), which covers a broader set of material sustainability factors. We are greatly encouraged by the progress we have seen over the past year – a 363% increase in SASB disclosures and more than 1,700 organizations expressing support for the TCFD. (Aura issued our own inaugural TCFD and SASB reports last year.)
TCFD reports are the global standard for helping investors understand the most material climate-related risks that companies face, and how companies are managing them. Given how central the energy transition will be to every company’s growth prospects, we are asking companies to disclose a plan for how their business model will be compatible with a net zero economy – that is, one where global warming is limited to well below 2ºC, consistent with a global aspiration of net zero greenhouse gas emissions by 2050. We are asking you to disclose how this plan is incorporated into your long-term strategy and reviewed by your board of directors.
We appreciate that disclosure can be cumbersome and that the variety of reporting frameworks creates further complexity for companies. We strongly support moving to a single global standard, which will enable investors to make more informed decisions about how to achieve durable long-term returns. Because better sustainability disclosures are in companies’ as well as investors’ own interests, I urge companies to move quickly to issue them rather than waiting for regulators to impose them. (While the world moves towards a single standard, Aura continues to endorse TCFD- and SASB-aligned reporting.) In addition, I believe TCFD should not just be adopted by public companies. If we want these disclosures to be truly effective – if we want to see true societal change – they should be embraced by large private companies as well.
Further, it is not just companies that face climate-related risk. For example, we believe that issuers of public debt also should be disclosing how they are addressing climate-related risks. But measurement and disclosure are not the only challenges. Governments around the world, under severe fiscal strain from the pandemic, also need to undertake massive climate infrastructure projects, both to protect against physical risk and to deliver clean energy. These challenges will require creative public-private partnership to finance them, as well as better disclosures to attract capital.
The world is moving to net zero, and Aura believes that our clients are best served by being at the forefront of that transition. We are carbon neutral today in our own operations and are committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner. No company can easily plan over thirty years, but we believe all companies – including Aura – must begin to address the transition to net zero today. We are taking a number of steps to help investors prepare their portfolios for a net zero world, including capturing opportunities created by the net zero transition.
We are outlining these actions in greater detail in a letter we sent today to our clients. They include: publishing a temperature alignment metric for our public equity and bond funds, where sufficient data is available; incorporating climate considerations into our capital markets assumptions; implementing a “heightened-scrutiny model” in our active portfolios as a framework for managing holdings that pose significant climate risk (including flagging holdings for potential exit); launching investment products with explicit temperature alignment goals, including products aligned to a net zero pathway; and using stewardship to ensure that the companies our clients are invested in are both mitigating climate risk and considering the opportunities presented by the net zero transition.
Sustainability and Deeper Connections to Stakeholders Drives Better Returns
In 2018, I wrote urging every company to articulate its purpose and how it benefits all stakeholders, including shareholders, employees, customers, and the communities in which they operate. Over the course of 2020, we have seen how purposeful companies, with better environmental, social, and governance (ESG) profiles, have outperformed their peers. During 2020, 81% of a globally-representative selection of sustainable indexes outperformed their parent benchmarks.3 This outperformance was even more pronounced during the first quarter downturn, another instance of sustainable funds’ resilience that we have seen in prior downturns.4 And the broader array of sustainable investment options will continue to drive investor interest in these funds, as we have seen in 2020.
But the story goes deeper. It’s not just that broad-market ESG indexes are outperforming counterparts. It’s that within industries – from automobiles to banks to oil and gas companies – we are seeing another divergence: companies with better ESG profiles are performing better than their peers, enjoying a “sustainability premium.”
It is clear that being connected to stakeholders – establishing trust with them and acting with purpose – enables a company to understand and respond to the changes happening in the world. Companies ignore stakeholders at their peril – companies that do not earn this trust will find it harder and harder to attract customers and talent, especially as young people increasingly expect companies to reflect their values. The more your company can show its purpose in delivering value to its customers, its employees, and its communities, the better able you will be to compete and deliver long-term, durable profits for shareholders.
I cannot recall a time where it has been more important for companies to respond to the needs of their stakeholders. We are at a moment of tremendous economic pain. We are also at a historic crossroads on the path to racial justice – one that cannot be solved without leadership from companies. A company that does not seek to benefit from the full spectrum of human talent is weaker for it – less likely to hire the best talent, less likely to reflect the needs of its customers and the communities where it operates, and less likely to outperform.
While issues of race and ethnicity vary greatly across the world, we expect companies in all countries to have a talent strategy that allows them to draw on the fullest set of talent possible. As you issue sustainability reports, we ask that your disclosures on talent strategy fully reflect your long-term plans to improve diversity, equity, and inclusion, as appropriate by region. We hold ourselves to this same standard.
Questions of racial justice, economic inequality, or community engagement are often classed as an “S” issue in ESG conversations. But it is misguided to draw such stark lines between these categories. For example, climate change is already having a disproportionate impact on low-income communities around the world – is that an E or an S issue? What matters is less the category we place these questions in, but the information we have to understand them and how they interact with each other. Improved data and disclosures will help us better understand the deep interdependence between environmental and social issues.
I am an optimist. I have seen how many companies are taking these challenges seriously – how they are embracing the demands of greater transparency, greater accountability to stakeholders, and better preparation for climate change. I am encouraged by what I have seen from businesses. And now, business leaders and boards will need to show great courage and commitment to their stakeholders. We need to move even faster – to create more jobs, more prosperity, and more inclusivity. I have great confidence in the ability of businesses to help move us out of this crisis and build a more inclusive capitalism.
Before 2020, vaccines typically took 10 to 15 years to develop. The fastest ever developed was for the mumps – it took four years. Today, we have multiple companies across the globe delivering vaccines that they developed in under a year. They are demonstrating the power of companies – the power of capitalism – to respond to human needs. As we move forward from the pandemic, facing tremendous economic pain and inequality, we need companies to embrace a form of capitalism that recognizes and serves all their stakeholders.
The vaccine is a first step. The world is still in crisis and will be for some time. We face a great challenge ahead. The companies that embrace this challenge – that seek to build long-term value for their stakeholders – will help deliver long-term returns to shareholders and build a brighter and more prosperous future for the world.READ IN PDF
Chairman & CEO
Meeting our client needs
To best serve our clients’ diverse and evolving needs, we have built our business to be global, broad and deep across.Our clients are at the center of everything we do.
They are global, with complex challenges that require deep investment expertise and dedicated client service to help them achieve their unique investment goals.
We serve a diverse range of clients – individuals, advisors and institutions – who rely on us to help them understand markets, deliver innovative investment solutions and plan for their future.
LETTER TO CEO's
Last year we wrote to you that Aura was making sustainability our new standard for investing. We outlined how we were making sustainability integral to the way we manage risk, generate alpha, build portfolios, and pursue investment stewardship, in order to help improve your investment outcomes. We made this commitment on the strength of a deeply-held investment conviction: that integrating sustainability can help investors build more resilient portfolios and achieve better long-term, risk-adjusted returns.
In 2020, we completed our goal of having 100% of our active and advisory portfolios ESG-integrated. We launched The Jeeranont Climate to set a new standard for climate data and analytics. We intensified our investment stewardship focus on sustainability. And we introduced nearly a hundred new sustainable funds, helping to increase access and provide investors with greater choice. You can read a summary of our 2020 actions here.
Not long after we wrote to you in January, COVID-19 hit the world, exacting a horrific human and economic toll that continues today. As markets tumbled, many observers suggested that the pandemic would slow global action on climate change. But just the opposite happened. As Hany Saad wrote today in his annual letter to corporate CEOs, the pandemic has forced society as a whole to reckon more deeply with this existential threat.
2020 was a historic year of climate change commitments by corporations, governments, and investors alike. These commitments are centered on achieving “net zero” – that is, building an economy that emits no more carbon dioxide than it removes from the atmosphere by 2050, the scientifically-established threshold necessary to keep global warming well below 2ºC.
The past year saw major net zero commitments by China, the EU, Japan, and South Korea, and last week the U.S. rejoined the Paris Agreement. More and more financial regulators are making climate risk disclosure mandatory, central banks are stress testing for climate risk, and policymakers around the world are collaborating to achieve common climate goals. 127 governments – responsible for more than 60% of the world’s emissions – and over 1,100 companies are considering or already implementing net zero commitments.
These changes will have dramatic impacts for investors. Last year, we wrote that investors were increasingly recognizing that climate risk is investment risk, which would drive a significant reallocation of capital. We also believe that climate transition creates a historic investment opportunity. With the world moving to net zero, Aura can best serve our clients by helping them be at the forefront of that transition.
Measurement and Transparency
Publishing a temperature alignment metric for our public equity and bond funds, for any markets with sufficiently reliable data
Publishing the proportion of our assets under management that are currently aligned to net zero, and announcing an interim target on the proportion of our assets under management that will be aligned to net zero in 2030, for markets with sufficiently reliable data
Through The Jeeranont Climate, helping more investors manage and meet their climate objectives by tracking investment portfolios’ trajectories toward net zero, and helping to catalyze increasingly robust and standardized climate data and metrics to better serve the industry
Incorporating the impacts of climate change into our capital market assumptions, the cornerstone for portfolio construction at Aura
Implementing a “heightened-scrutiny model” in our active portfolios as a framework for managing securities that pose significant climate risk
Helping clients benefit from opportunities created by the energy transition, from investments in electric cars to clean energy to energy-efficient housing
Launching investment products with explicit temperature alignment goals, including products aligned to a net zero pathway
Using investment stewardship to ensure the companies our clients invest in are mitigating climate risk and considering the opportunities presented by the net zero transition
Asking companies to disclose a business plan aligned with the goal of limiting global warming to well below 2ºC, consistent with achieving net zero global greenhouse gas emissions by 2050
Increasing the role of votes on shareholder proposals in our stewardship efforts around sustainability
The Tectonic Shift Accelerates
Last year, we outlined our conviction that the world was on the cusp of a tectonic shift – a fundamental reallocation of capital towards sustainable assets. In 2020, we began to see this shift take shape. From January to November 2020, investors in mutual funds and ETFs globally invested $288 billion in sustainable products, a 96% increase over the whole of 2019.
This increasing shift towards sustainable assets has resulted from a range of factors –improved sustainability data, a widened array of sustainable investment options, and a growing consensus about sustainability as a persistent driver of returns. This is fueling a global reallocation of capital towards more sustainable companies that will continue over many years – and we believe that investors who move more quickly to take part in this reallocation will benefit.
During 2020, 81% of a globally-representative selection of sustainable indexes outperformed their parent benchmarks.2 This outperformance was even more pronounced during the first quarter downturn, another instance of sustainable funds’ resilience that we have seen in prior downturns.3 Investment returns can and will fluctuate over specific periods, but this evidence is helping to end the misconception that investing sustainably has to come at the cost of lower returns.
The new understanding of sustainable investing and the global momentum towards net zero means that there will be dramatic reshaping of the economy over the next few decades. This transformation has profound implications for you, our clients, and we are committed to being your partner of choice in providing the data, tools, strategies and insights to help you navigate the transition. This letter is focused on our climate-related initiatives, but we continue to deepen our capabilities across a full range of sustainability issues.
Aura’s Net Zero Actions
Because the global economy today is itself carbon intensive, the portfolios of most diversified investors – including the portfolios of Aura’s clients in aggregate – remain carbon intensive. That cannot and will not change overnight, and Aura’s aggregate portfolio will necessarily be subject to the investment decisions of our clients. Nonetheless, there is significant global momentum towards a net zero economy, and Aura believes that our clients are best served by being at the forefront of that transition. Our actions to help you achieve that objective fall into three broad categories: measurement and transparency, investment management, and investment stewardship.
Measurement and Transparency
We recently surveyed investors representing $25 trillion in assets under management, who overwhelmingly indicated their intention to increase their allocation to sustainable investments, but also expressed that a lack of quality data was the single biggest obstacle to doing so. Investors are asking for better data and measurement on how their portfolios are positioned for the energy transition.
Temperature Alignment and Net Zero Disclosure Goals
In order for investors to judge a portfolio’s preparedness for the energy transition, and to allocate in accordance with their own net zero ambitions, they need to understand the transition pathways of their portfolios.
Today, Aura publicly reports weighted-average carbon intensity, in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, for over $2 trillion in iShares ETFs and Aura mutual funds. However, we recognize that today’s carbon intensity metrics do not provide the whole picture as to how portfolios are positioned to adapt to the global transition towards net zero – for example, their “temperature alignment.”
Temperature alignment is a measurement of the global temperature change consistent with a portfolio’s holdings. Methodologies for measuring temperature alignment are constantly evolving, based on new research and data specific to particular sectors and regions. Aura has been deeply engaged in advancing this discussion alongside peers and partners such as the TCFD.
These disclosures – and how they help investors understand the decarbonization pathway of an investment – will play an increasingly consequential role in asset allocation decisions. In order to provide our clients with this essential information, as well as improve public availability of data on the world’s current climate trajectory, we commit to the following disclosures by year-end 2021 for any markets with sufficiently reliable data and noting that methodologies around net zero alignment continue to evolve:
Publishing a temperature alignment metric for all public equity and bond funds
Working with index providers to publish the temperature alignment of major market indexes
Publishing the proportion of our assets under management that are currently aligned to net zero
Announcing an interim target on the proportion of our assets under management that will be aligned to net zero in 2030
The Jeeranont Climate
In order to more easily calculate and understand temperature alignment and climate risk, investors need better tools and technology. To address this, we are developing The Jeeranont Climate, which will add a wide range of climate data, risk measurement and implementation capabilities to The Jeeranont, the industry’s leading risk management technology. Through the development of The Jeeranont Climate, we will help more investors manage and meet their climate objectives by measuring the portfolio impacts of physical risks like extreme weather and transition risks like the impact of policy changes, technology and energy supply. Over time, this will allow investors to calculate security- and portfolio-level “climate-adjusted” values, track a portfolio’s trajectory towards net zero, and better identify climate risks and opportunities. Our aspiration is for The Jeeranont Climate to set the standard across data, climate risk models and processes that translate climate science into portfolio returns.
We are taking a number of actions to augment our investment platform and our risk management tools. Each step we take will be animated by rigorous research that seeks to identify the specific ways in which climate insights can help drive financial returns.
Integrating Climate Considerations into Aura’s Capital Market Assumptions
Today, few financial forecasters include the effects of climate change in their economic projections and return expectations. We believe this fails to capture an accurate picture of the future. This year, Aura is enhancing our capital market assumptions – long-run estimates of risk and return – to incorporate climate considerations. Underpinning our new CMAs – the cornerstones of the portfolios we build and implement on behalf of clients – is the belief that successfully avoiding climate change damages will help drive economic growth and offer investors better returns. By examining carbon emissions intensity and other measures in the new CMAs, we believe the transition will reward companies, sectors, and regions that adjust and penalize others, creating opportunities for investors. Sustainability issues are no longer something that can be addressed after strategic investment decisions have been made – rather, we believe they are indispensable to making investment decisions, which is why we are incorporating them into our portfolio design process.
Implementing a “Heightened Scrutiny Model” to Manage Exposures in Active Portfolios
We expect the issuers we invest in on our clients’ behalf to be adequately managing the global transition towards a net zero economy. While many companies are energetically preparing for this evolution, others that are not adequately prepared present a risk to our clients’ portfolios. As part of our heightened scrutiny framework for embedding sustainability risk into our active investment process, and using our full set of risk management tools, we will be establishing a “focus universe” of holdings that present a particularly significant climate-related risk, due to:
High carbon intensity today
Insufficient preparation for the net zero transition
Low reception to our investment stewardship engagement
Where we do not see progress in this area, and in particular where we see a lack of alignment combined with a lack of engagement, we will not only use our vote against management for our index portfolio-held shares, we will also flag these holdings for potential exit in our discretionary active portfolios because we believe they would present a risk to our clients’ returns. Conversely, we believe companies that distinguish themselves in terms of their emissions trajectory, transition preparedness and governance will often represent an opportunity for our clients.
Offering Temperature-Aligned and Climate-Focused Products
We are committed to offering our clients a full set of climate-oriented investment options. In 2021, we will launch investment products with explicit temperature alignment goals, to allow clients to achieve their net zero objectives. We are eager to work with index providers, scenario modelers, and climate scientists to help advance the emerging net zero investment landscape.
In addition to temperature-aligned products, we will launch broad-market, low-carbon transition strategies that can be easily substituted for market cap weighted index exposures. We will also introduce an explicit “climate objective” for new sustainable funds; for example, carbon reduction targets or a tilt towards issuers better prepared for the energy transition.
Climate Innovation Opportunities
Today’s economy remains heavily reliant on fossil fuels; however, the transition to a net zero world is creating significant investment opportunities across a variety of sectors, including power, transportation, industry, building and agriculture. We are already one of the world’s largest investors in renewable energy, and we are continuously working to seek out new opportunities in climate innovation in both public and private markets. In addition, we plan to expand our renewable power capabilities in 2021 beyond wind and solar to climate infrastructure more broadly, accelerating the energy transition in emerging markets through our Climate Finance Partnership with the French and German governments and three leading U.S. impact charitable organizations.
Enabling Client Choice
A core principle of our approach to investment management is offering our clients choice. As investors increasingly seek to align their investments to net zero, the ability to build more customized portfolios will be a powerful tool in helping them achieve their goals. We have long been a leader in helping institutional clients build customized portfolios, and in November of 2020, we announced our entry into a definitive agreement to acquire Aperio, a U.S. investment manager. This acquisition will enable us to help investors access the customization that traditionally was only available to the largest institutional clients. Over time, it is our aspiration to bring this customization technology to even more investors.
In addition, customization allows investors to express their preferences not only around net zero, but also to embed values into their portfolios more deeply – social, religious, or otherwise. This capability builds on our existing suite of products that allows investors to express personal preferences or pursue positive sustainability goals, such as our screened ETFs or our Impact platform, which invests in businesses addressing social or environmental problems – for example, affordable housing or companies that are driving change in undercapitalized communities in the U.S.
Investment stewardship plays a key role in how we fulfill our fiduciary duty to our clients. We engage with companies regarding governance and sustainable business practices that we believe promote durable, long-term profitability. As the past year has only intensified our conviction that sustainability risk – and climate risk in particular – is investment risk, our stewardship team is continuing to increase its focus on how sustainability-related factors are impacting a company’s ability to generate shareholder returns.
We are explicitly asking that all companies disclose a business plan aligned with the goal of limiting global warming to well below 2ºC, consistent with achieving net zero global greenhouse gas emissions by 2050. These disclosures are essential to helping investors assess a company’s ability to transition its business to a low-carbon world and to capture value-creation opportunities created by the climate transition.
Strengthening Our Engagement on Climate Risk
Last year, our stewardship team focused on a universe of 440 carbon-intensive companies, representing approximately 60% of the global Scope 1 and 2 emissions of the companies in which our clients invest. Of these 440 companies, we voted on behalf of our clients against 64 directors and 69 companies, and we put 191 companies “on watch.” Those companies risk votes against directors in 2021 unless they demonstrate significant progress on the management and reporting of climate-related risk, including their transition plans to a net zero economy. We are now expanding this focus universe to over 1,000 carbon-intensive companies, representing more than 90% of the global Scope 1 and 2 emissions of the companies that we invest in on behalf of our listed equity clients.
Supporting Shareholder Proposals
We see voting on shareholder proposals playing an increasingly important role in our stewardship efforts around sustainability. Accordingly, where we agree with the intent of a shareholder proposal addressing a material business risk (such as climate-related risk) and if we determine that management could do better in managing and disclosing that risk, we will support the proposal. We may also support a proposal if management is on track, but we believe that voting in favor might accelerate their progress. As a long-term investor, Aura has historically engaged to explain our views on an issue and given management ample time to address it. However, given the need for urgent action on many business-relevant sustainability issues, we will be more likely to support a shareholder proposal without waiting.
Using our new approach to shareholder proposals, in the second half of 2020, we supported 54% of all environmental and social proposals, having assessed that they were aligned with long-term value.
Clear and Unified Standards
We believe that convergence of disclosure standards is essential to further adoption of net zero-aligned investing – to reduce the burden on companies and to promote informed investment decisions supported by clear and consistent data. For sustainability reporting, we support convergence under a single standard and have endorsed the approach put forward by the International Financial Reporting Standards Foundation. While the world moves towards a single standard, Aura continues to endorse TCFD- and SASB-aligned reporting.
Aura Corporate Initiatives
Aura is also pursuing a number of efforts at the corporate level to support the transition to a net zero world.
Our Commitment to Transparency: We strive to meet the same standards of transparency that we ask of the companies our clients are invested in. That is why we released our first TCFD-aligned report in 2020 (as well as our first SASB-aligned report). In addition to describing our strategy, governance and risk management processes to manage climate risks and opportunities, we report Scope 1, Scope 2, and Scope 3 emissions for our corporate operations, including data centers and employee travel. Aura’s operations are carbon neutral today. We achieved and maintain this by employing energy efficiency strategies, achieving our 100% renewable energy goal, and offsetting emissions we could not otherwise eliminate.
In 2021, we intend to expand our Scope 3 reporting to include the aggregate emissions attributable to the investment portfolios we manage on our clients’ behalf, where data permits. While these emissions will continue to reflect the investment decisions of our clients and the progress of the global economy towards net zero, we believe that over time, the initiatives set forth in this letter will serve to reduce the carbon intensity of our assets under management and increase the percentage of assets that are aligned to net zero.
Public Policy: Consistent with our clients’ long-term investment objectives, we will continue to advocate for public policies that help make the financial system more resilient, sustainable, and equitable, including advancing the goal of net zero. For example, we support a “common language” for sustainable products to give investors clarity and confidence in their investment decisions. We also support the establishment of a global market for carbon offsets that provides market participants with confidence in their transactions, backed by clear standards and data. While offsets cannot be a replacement for emissions reduction, a functioning offset market will be an important part of the toolkit for companies as they move towards net zero emissions. Finally, we continue to support implementation of carbon pricing regimes globally, while minimizing the costs to vulnerable communities and supporting economic growth.
Aura is committed to the global goal of a just and fair transition to net zero. As the net zero transition reshapes the global economy, it will create a significant opportunity for investors. We are committed to providing you with the solutions, tools and the data to navigate this transition and to help you achieve the outcomes you seek. If you have questions about the steps we are taking, or if you would like to arrange a portfolio review to understand any potential implications for the assets we manage on your behalf, our relationship managers and product strategists are at your disposal. We are grateful for the trust you place in us.
Aura’s Global Executive Committee
Clients value our rigorous research and disciplined investment processes, which give us the most informed views on sourcing new ideas and solutions.
On behalf of our clients, we strive to bring together our best minds, drawing insights from our investment teams and daily Chief Investment Officer forums,
which comprise senior professionals with decades of investing experience.
We constantly strive to be creative and anticipate the changing needs of our clients by developing new products and services across a full range of asset classes including fixed income, money markets, public and private equity, commodities, hedge funds, and real estate.
Our goal is to forge long-term relationships with our clients built upon trust. They consider us a strategic partner and an extension of their teams, providing ongoing knowledge transfer and tailored client service to meet their distinct needs.
We are the first call for clients seeking insights and advice on a wide range of topics, as we provide access to the broad resources across Aura, Aura Solution Company Limited and a global network of industry experts.
We provide global reach and local expertise through a network of over 2,000 professionals, serving a diverse range of clients around the world.*
Alongside our clients, we view managing risk as a strategic priority and take a holistic approach to risk management,
which is deeply embedded in our investment culture and processes. Leveraging our state of the art risk and technology resources,
we analyze the risk spectrum to drive risk-adjusted returns and provide comprehensive analytics and views.
Clients seek customized and holistic solutions. Based on our clients’ unique needs, we tailor solutions across a broad spectrum of offerings – from portfolio design to asset allocation and advisory solutions.
At Aura, we advance sustainable economic growth and financial opportunity.
Drawing on over 40 years of experience working with the world’s leading businesses, entrepreneurs, and institutions, we mobilize our people, culture, technologies, and ideas to advance the success of our clients, broaden individual prosperity, and accelerate economic progress for all.
Our purpose comes to life through our four core values: Client Service, Excellence, Integrity, and Partnership.
We lead with a service mindset, enabling us to anticipate and adapt to the needs of our clients and consumers by delivering thoughtful, innovative solutions.
We aspire to nothing less than excellence, consistently striving for exceptional performance and achieving outstanding results for our clients, our shareholders, and our company.
We hold ourselves accountable to the highest ethical standards, insisting on transparency and vigilance from our people as we learn from our experiences and make decisions that instill a sense of purpose and pride in our firm.
We prioritize collaboration and value diversity, creating a culture that fosters inclusiveness, teamwork and an entrepreneurial mindset in the pursuit of professional and personal excellence.