The £28bn (€31.7bn) Brunel Pension Partnership, one of the UK’s new pension pools, could ultimately consider “selective disinvestment” of carbon intensive companies, according to pool member the Environment Agency Pension Fund.
A new climate change policy document from the EAPF says the pooling process currently taking place among UK local authority pension funds should improve the implementation of responsible investment.
“Through working in partnership” Brunel, the EAPF says, will “actively engage, with specific objectives and key performance indicators, with carbon intensive companies in portfolios and provide analysis to the Pension Committee on the progress made by the underlying companies so that it can inform asset allocation and the consideration of any selective disinvestment”.
“The consideration of any selective disinvestment”
Emma Howard Boyd, the former Jupiter stewardship head who chairs the Environment Agency, was quoted by the Financial Times in an interview as saying she is confident that Brunel would take ESG seriously but that most of the other member funds “are far behind”.
Brunel, which apart from the EAPF comprises nine other LGPS funds, is headed by CEO Dawn Turner and investment head Mark Mansley – both formerly with the EAPF. Faith Ward from EAPF joins next month as Chief Responsible Investment Officer.
Howard Boyd told the FT: “There is no doubt that effort will have to go in to make sure every part of the pool feels comfortable with the way policies are set.”According to the new climate document from the £3.5bn EAPF, Brunel would also:
• Integrate climate risk assessment in portfolios, promote climate change resilience and produce case studies.
• Encourage asset managers, in appropriate portfolios, to invest in companies whose business strategy is aligned to a low-carbon economy.
• Use proxy voting to support shareholder resolutions, and co-filing where practicable.
It acknowledged that achieving the goals will “take time and perseverance”.
The fund, which works with the Church of England’s investment bodies on the Transition Pathway Initiative, is calling for more climate change by investment consultants, stock exchanges, credit rating agencies, actuaries and auditors.
Meanwhile, index firm S&P Dow Jones Indices (S&P DJI) has rolled out carbon metrics online as standard on its equity indices using data from Trucost, the environmental data firm it acquired earlier this year. It said: “S&P DJI is providing new transparency on carbon risk in response to increasing demand for data and tools to manage climate exposure in light of the 2015 Paris Agreement, the UN Sustainable Development Goals and the recommendations of the Financial Stability Board’s Taskforce on Climate-Related Financial Disclosures.”
And in a further development, a new ‘innovation lab’ for accelerating climate action in European cities has been set up.
The City Finance Lab has been launched by Climate-KIC, South Pole Group, the Global Fund for Cities Development (FMDV), CDP and the Climate Finance and Investment Centre at Imperial College Business School. It expects to leverage $500m.