Will Martindale: The pursuit of ‘real-world’ change

At the start of the year, UK pension advisory and investment management firm Cardano completed its acquisition of ACTIAM, a leading Dutch asset manager dedicated to sustainable investing. ACTIAM not only brought over £18.5bn of assets to Cardano’s existing AUM of £45bn, but also three decades of experience in impact investing. Cardano’s group head of sustainability, Will Martindale, says this deal is a sign of how seriously the group is taking its net-zero ambition.

“It is very much going to put us in the premier league when it comes to our sustainable investment approach,” says Martindale who explains ACTIAM’s and Cardano’s investment processes are now being aligned. The acquisition has boosted the headcount in Cardano’s sustainable investment team, with ACTIAM employees bringing invaluable experience to the day-to-day running of portfolios. The leading priority of this new, larger team? Addressing the climate crisis.

The net-zero target year for Cardano is 2050, with this the deadline for implementation across its portfolios. Martindale and his team are eager to make meaningful progress on this front and to make a point the group is not simply following a trend: “We think net-zero is timeless.

“We did not find it difficult to make a net-zero commitment when net zero as a concept was first being socialised within the financial community. We were in the second wave of asset managers to sign up to the Net Zero Asset Managers Initiative. That is because net zero is an expression of science.”

A three-pronged approach

A lot of work is being carried out across Cardano’s portfolios, explains Martindale: “Like most firms, the detail is still evolving. We recognise that we’re learning as we’re going – but we’ve made a number of investment decisions to ensure we are on track to meet these targets.”

First, Cardano has changed how portfolios hedge inflation risk for pension scheme clients. This would usually have been done for futures on oil and gas but, to minimise an economic exposure to these, hedging is now done via base metals. The decision to do this was due to base metals’ role in the ongoing energy transition, with Cardano also a member of a working group looking at derivatives and their contribution to net zero – run by the Institutional Investors Group on Climate Change.

Cardano is also increasing its allocation to ESG-themed debt, particularly green primary issuance, as Martindale sees these as having the biggest impact towards climate change.

“This sends a strong signal to the market because many of these issuances tend to be oversubscribed. We are saying the institutional investment community is looking for further green, primary issuances,” adds Martindale.

The UK group has also allocated to a low-carbon ESG-screened physical equity portfolio as Martindale sees engagement as “an important tool” to bringing corporate activity to align with net-zero targets. “But stewardship is a challenge,” he adds. “While we are seeing stewardship get increased attention, we still see this remaining an under-utilised tool in the investment community.”

A front-row seat

Martindale is watching how the industry integrates net-zero targets, and overcomes challenges, with interest. For several years he was head of policy at the UN Principles for Responsible Investment (PRI). He worked there after a career break living in Central Africa, and a spell at Oxfam as the charity’s financial sector policy adviser.

“I spent my 20s working in investment banking,” recalls Martindale, referring to spells at BNP Paribas and JP Morgan where he worked on credit trading desks. “I feel privileged I had a front-row seat for the growth of this industry. During my time at PRI, sustainable investment moved from being largely involuntary to something that has become an investment imperative.

“I’m optimistic because of the huge potential of sustainable investing and net zero. The clients we work with are really embracing this and we are seeing asset owners really embedding change into their decisions – the foundations are there to make a difference.”

This “difference” is the challenge facing Martindale, and others attempting to reach net-zero targets. The group chief sustainability officer and his team are working hard to change their portfolios, but he is aware of the challenge involved in getting this to make a dent in the pace of climate change. He remains optimistic, however: “The challenge is making sure these commitments lead to real-world change.

“It’s not been difficult to create portfolios tilting towards green targets, but it does not change much in the real world. At a systemic level, we are not seeing economies decarbonise. The next two to three years will be real inflection point.”