UK pension funds join forces in emerging markets climate transition initiative | News
A group of 12 leading UK pension funds, brought together by the Church of England Pensions Board (CEPB), have come together to think together about how to support a low-carbon energy transition in emerging markets.
As well as the CEPB, the group* includes three local government pension scheme asset pools, the two largest UK private pension schemes – BT Pension Fund and Universities Superannuation Scheme – NEST, Railpen and West Yorkshire Pension Fund.
In a statement, the pension funds said they were committed to working together, in line with their fiduciary responsibility, to consider how they could scale up investment for climate transition in emerging economies.
“While we can invest individually, and a number of us already do, we want to explore whether greater impact and scale of engagements can be achieved by developing a shared understanding of the need, opportunity and mechanisms to provide such funding,” they said. .
They said they were committed to working with the UK COP26 Presidency and international financial institutions “to consider the most practical and effective way to target and scale up the financing that could be provided by the funds British pension funds, either through individual commitments or through the creation of a commitment partnership in line with our respective investment strategies”.
The funds outlined their intentions at the opening of a conference in London today, the “Net Zero Delivery Summit”. The collaboration was agreed following an investor roundtable, chaired by Adam Matthews, Director of Responsible Investments at CEPB, with the UK Pensions Minister.
The group aims to be able to define the next steps by COP27 in Egypt later this year.
“This initiative will be key to our understanding and approach, and to identifying the support we need from the UK Government to work constructively with our peers to achieve emission reductions in the real world”
Clive Mather, Chairman of the Church of England Pensions Board
CEPB’s Matthews said the formation of the group was “a signal of a genuine intention to work collaboratively and with the aim of developing a common approach and implementing it”.
“We can see the need in countries like South Africa, where you have clear government commitments and public funding on the table, but a need for additional funding for the transition that could be met by investing the funds pensions in these economies,” he said.
Clive Mather, Chairman of CEPB, said: “We are convinced that the required level of investment in emerging markets will only be achieved if we can increase ambition and work with other investors.
“This initiative will be key to our understanding and approach, and to identifying the support we need from the UK Government to work constructively with our peers to achieve emission reductions in the real world.”
The initiative aligns somewhat with efforts by the Net-Zero Asset Owner Alliance to promote blended finance as a way to help mobilize more private capital for climate finance in emerging markets.
In the Netherlands, meanwhile, trust manager Van Lanschot Kempen has developed a new sustainable emerging markets index for its pension fund clients that excludes 30-40% of constituents, including Brazil.
*Group members are: Border to Coast Pensions Partnership; Brunel Retirement Partnership; BT pension fund; Church of England Pensions Board; Environment Agency Pension Fund; NEST; Northern LGPS: Legal and General Mastertrust; Legal and General Workplace Pension Plan and Stakeholder Pension Plan; rail pen; Universities Pension Scheme Ltd; and the West Yorkshire Pension Fund.
They have around £400bn of assets under management between them.