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ABP and National Trust sign up to net-zero investment initiative

Europe’s largest pension fund, the Church of Sweden and the National Trust are among six new signatories to a global net-zero asset owner commitment to decarbonise financial portfolios in line with the ambitions of the Paris Agreement.

Through the initiative, asset owners commit to decarbonising pension funds and investment portfolios by 2050 at the latest

Through the initiative, asset owners commit to decarbonising pension funds and investment portfolios by 2050 at the latest

Europe’s largest pension fund, Stichting Pensioenfonds ABP (ABP), the National Trust and the Church of Sweden have been joined by the South Yorkshire Pension Fund, Wiltshire Pension Fund and TPT Retirement Solutions in signing up to the Paris Aligned Investment Initiative’s Net Zero Asset Owner Commitment.

The new signatories collectively represent $617bn in assets under management.

The Paris Aligned Investment Initiative was established in May 2019 by the Institutional Investors Group on Climate Change (IIGCC) in collaboration with more than 70 global investment firms. Collectively, the cohort manages more than $16trn of assets.

Through the initiative, asset owners commit to decarbonising pension funds and investment portfolios by 2050 at the latest, while scaling up investment into climate solutions. Both targets should be in alignment with the 1.5C or net-zero trajectory. Additionally, members must set interim targets for decarbonisation and investment, while lobbying, advocating and voting for other organisations and institutions to decarbonise.

The six investors joining the initiative today mean that 38 asset owners and asset managers representing $8.5trn are now using the framework.

In August last year, five investors agreed to trial the initiative’s blueprint in real-world scenarios, namely Brunel, APG, Scottish Widows, the Church of England Pensions Board and Standard Life. Collectively, they have applied the blueprint to assets valued at £1trn. 

The IGCC’s chief executive Stephanie Pfeifer said: “Net-zero commitments are vital but must be matched with robust action plans. Growing uptake of the Net Zero Investment Framework ensures more investors are now able to maximise their contribution to the energy transition by adopting a net-zero investment strategy.”

The overarching initiative is also collaborating with the Partnership for Carbon Accounting Financials (PCAF). The Partnership is a global collaboration between financial institutions, aimed at uniting the sector in Paris Agreement alignment and at increasing climate and nature-related disclosures in regard to loans and investments. It was launched in 2019 and, as of 2020, has garnered the support of more than 60 banks and investors that represent more than $5.3trn (£4.1trn) in assets under management.

Strathclyde Pension Fund 

In related news, the £26.8bn Strathclyde Pension Fund has stated that it looks set to divest from companies failing to align with the low-carbon movement, including putting £62m worth of fossil fuel investments on notice.

In response to a call from the Glasgow City Council for the pension fund to divest from fossil fuels, the organisation is now undertaking a mapping exercise to uncover its exposure to energy firms. Once completed, the fund will engage with energy and fossil fuel firms to decarbonise, at risk of divestment.

Commenting on Strathclyde Pension Fund’s commitment, Make My Money Matter’s chief executive Tony Burdon said: “We believe every pension fund in the UK must commit to net-zero, with a halving of emissions by 2030.

“We’ve already seen multiple local government pension schemes such as Greater Manchester, South Yorkshire and Brunel Pension Partnership make this vital move, along with other major pension funds such as Nest, Scottish Widows and Aviva. Strathclyde Pension Fund’s announcement that they are ‘putting fossil fuel companies on notice’, while welcome, is far from the urgent action that the planet – and their own members – need.”

Disclosure drive

The announcements come as a group of investors with £8.5trn of assets under management has called on G7 nations to introduce new climate disclosure and action mandates for big businesses – and to provide more detail on how their long-term climate goals will be delivered.

The call to action was made by the UK-based trade body the Investment Association (IA) ahead of the G7 meeting in Cornwall this week. Climate action is set to be one of the summit’s main priorities, along with the response to the Covid-19 pandemic.

The IA is calling for new rules that would mandate big businesses to disclose their exposure to climate risks in a unified manner. The Task Force on Climate-Related Disclosures (TCFD) framework is currently the world’s most popular and nations including the UK have outlined plans for mandatory TCFD reporting. According to the IA, scaling this requirement is vital for keeping tabs on international firms.

G7 finance ministers have since agreed to mandate climate disclosure for corporates moving forward, although timeframes are yet to be established.


edie’s Sustainable Investment Conference

Financial and environmental experts from some of the world’s largest investors and banks will discuss the prominent rise in environmental, social and governance (ESG) investing and what that means for business at edie’s Sustainable Investment Conference next month.

The two-day digital event takes place on 13-14 July and will see sustainability professionals from businesses and financial experts from investors meet to discuss the array of challenges and opportunities that embracing the green recovery can bring.

Find out more information here.

Matt Mace

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