UK pension organisations join Paris-aligned asset owners group

The Paris Aligned Investment Initiative Net Zero Asset Owner Commitment has welcomed 12 new asset owners to the group, bringing the total number of signatories to 40.

As reported by our sister publication, European Pensions, the initiative is a collaborative investor-led global forum that supports investors in aligning their portfolios and activities with the goals of the Paris Agreement.

Signatories have committed to decarbonising their portfolios by 2050 or sooner, increasing investment in climate solutions, setting interim targets, and undertaking advocacy and engagement in line with net-zero goals.

The new UK-based asset owners that signed up were London Pensions Fund Authority, Railpen and Tesco Pension Investment.

Alongside these UK-based signatories, AP Pension, AP3, AP7, the Church Pension Fund, Elo Mutual Pension Insurance Company, Ilmarinen, Lægernes Pension and PenSam have also joined the initiative.

“As momentum grows approaching COP26 and the focus on climate-related issues intensifies, we are pleased to see more asset owner investors making net-zero commitments,” commented Institutional Investors Group on Climate Change CEO, Stephanie Pfeifer.

“These commitments are incredibly important, and the first step on the path towards investors putting in place a net-zero investment strategy.

“We look forward to working with these asset owners on their net-zero strategies and would welcome other climate-conscious asset owners to consider becoming signatories to the Paris Aligned Asset Owners commitment.”

Asset owners will be using the Net Zero Investment Framework as a blueprint for aligning their portfolios with a 1.5°C net zero emissions future.

The framework aims to support investors in developing a net-zero investment strategy built around five core components: governance and strategy, objectives and targets, strategic asset allocation, asset class alignment, policy advocacy and investor engagement.

It currently covers four asset classes: listed equity, corporate fixed income, real estate and sovereign bonds, while work is underway to also include infrastructure, private equity, hedge funds and derivatives.

AP Pension head of responsible investments, Sandra Metoyer, stated: “As a responsible investor it is essential that we incorporate considerations for climate-related risks and opportunities in our investment strategy.

“This benefits not only our clients that we invest on behalf of, but also supports a transition towards a low carbon economy. Our commitment to transition to a net-zero portfolio by 2050 through IIGCC’s Paris Aligned Investment Initiative reflects the crucial role we believe investors collectively play in realising the objectives of the Paris Agreement.”

London Pensions Fund Authority CEO, Robert Branagh, added: “Climate change poses a material risk to society, business and so to our investments.

“As a responsible investor, it’s our duty to mitigate these risks. We’ve made significant progress decarbonising our portfolio to date following the introduction of climate change policy in 2017. Working closely with our delegated asset manager, Local Pensions Partnerships Investments, we will be developing our net zero action plan over the coming 12 months.”

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