RPMI Railpen has published its roadmap to a net zero portfolio, targeting a 50 per cent reduction in greenhouse gas emissions by 2030 and net zero emissions by 2050 "or sooner".

The net zero plan has been highlighted as an “important stride forward” in the group’s climate change journey, which will steer active emissions reduction and decarbonisation and build on the provider's "significant climate effort" to date.

Currently, the plan covers 65 per cent of Railpen’s portfolio, including investments in listed equities, corporate fixed income, and sovereign bonds, and is based on the Institutional Investors Group for Climate Change (IIGCC) Net Zero Investment Framework (NZIF).

However, as the IIGCC methodologies develop, the measures are expected to evolve further to include the group’s real estate, private equity, and infrastructure holdings over 2021/22.

The plan is aligned with the goals of the Paris Agreement and lays out the key initial steps to deliver on decarbonisation ambitions while remaining mindful of fiduciary duties.

The proposed portfolio decarbonisation journey is primarily driven through corporate engagement, with active ownership highlighted as "key" both to Railpen's approach to responsible investment and to the plan's success, as the provider intends to align investee companies with the Paris goals and increase the portfolio’s climate resilience.

In particular, the roadmap has set a current engagement target with issuers responsible for 70 per cent of portfolio material financed emissions and, by 2030, increasing to issuers contributing 90 per cent of portfolio material financed emissions.

The group also emphasised that it will continue to enhance its efforts, collaborating with investee companies that it believes will share its objectives, alongside work to identity and integrate climate risks while capitalising on climate-related opportunities.

As part of this, RPMI Railpen will work with both its investment teams and external asset managers to build and grow its capital invested in developing new low carbon investments in wind, biomass and other energy-efficient technologies.

Railpen sustainable ownership senior investment manager, Chandra Gopinathan, commented: “Our step-by-step plan is predicated on collaboration, strong governance and purposeful stewardship, which has always been at the heart of everything we do for our scheme members.

“In the last few years, we have been at the forefront of climate stewardship, leading successful collaborative engagements through CA100+ and robustly exercising our vote on climate accounting in the 2021 AGM season.

“We will enhance this engagement as part of the net-zero roadmap we have set out, as we believe that achieving net zero globally can only happen if the asset owner and the wider investment community purposefully steward high emitting companies.”

Railpen chief investment officer, Richard Williams, added: “As long-term investors, we have a fiduciary duty to secure our members’ futures. We believe that climate change is financially material across all major asset classes.

“In support of our duty, the risks and opportunities presented by climate change can be mitigated and benefit from asset allocation, individual investment decisions and purposeful stewardship. In doing this, we are also securing the long-term returns for our members and creating a better world for them to retire into.”

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