12 pension funds launch EM climate collaboration

The schemes include the £83bn Universities' Superannuation Scheme; the £57bn BT Pension Fund; Railpen, which manages the £37bn of assets; the £35bn Brunel Pension Partnership; the £55bn Border to Coast Pension Partnership; Nest, which has £24bn; and the £30bn Legal & General Workplace Pension Plan and Stakeholder Pension Plan.

The initiative - backed by pensions and financial inclusion minister Guy Opperman - will jointly consider how to support the climate transition in emerging markets and was announced at the opening of the two-day Net Zero Delivery Summit at Mansion House in London today (12 May).

The 12 funds said they recognised the urgency of supporting the climate transition in emerging economies and committed to explore how greater impact could be achieved through a "shared understanding of the need, opportunity and mechanisms to provide such investments in these markets".

The intervention was agreed following an investor roundtable hosted by the CofE Pensions Board with the pensions minister.

At the roundtable, the pension funds said they:

• Recognise the important role that asset owners can and should play in supporting emerging economies in achieving their climate targets. 
• Are committed to better understanding the needs of emerging economies and the climate transition finance that will be required by governments and companies.
• Are committed to working together, in line with their fiduciary responsibility, to consider how they may scale investments in support of the climate transition in emerging economies.
• Are committed to working with the UK COP26 presidency and other international financial institutions to consider the most practical and effective way to target and scale the funding that could be provided from UK pension funds, either through individual commitments or the creation of a joint commitment in line with our respective investment strategies.
• Recognise the urgency of the transition and are committed to working together ahead of COP27 in Egypt, to be in a position by the COP to outline our response.

Commenting on the collaboration, Opperman said: "I welcome today's statement from the CofE Pensions Board and leading industry members and thank them for our morning together formulating policy options at Church House.

"I look forward to working closely together to assess how we can further unleash the productive power of UK pensions in support of the climate transition in emerging economies, while also delivering sustainable returns for members."

CofE Pensions Board chief responsible investment officer Adam Matthews chaired the roundtable between the pension schemes and the minister. He said: "This is a signal of genuine intent to work collaboratively and with purpose to evolve a common approach and deliver on it.

"We can see the need in countries such as South Africa, where you have clear governmental commitments and public funding on the table but a need for further transition finance that could be met by pension funds investment in such economies."

CofE Pensions Board chair Clive Mather added: "We are committed to supporting the global climate transition and to playing the role we can, on our members' behalf, to support real world emissions reductions in emerging markets.

"We are clear that the level of investment required 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 our approach as well as identifying the support we require from the UK government to work constructively with our peers to achieve real world emissions reductions."

On behalf of the Environment Agency Pension Fund (EAPF), Environment Agency chair Emma Howard Boyd added: "If we are to reduce global then green investment in emerging economies is vital but we are yet to see significant market shifts. Meanwhile countries are frustrated the $100bn (£82bn) in climate finance promised to them by industrialised nations in 2009 has not been delivered. I'm pleased the EAPF and others are showing leadership by supporting emissions reductions in emerging economies. We look forward to working with other pension funds to share information and inform our future investments."

Border to Coast chief executive Rachel Elwell explained: "The journey to net zero requires consistent, co-ordinated and positive action if we are to meet the Paris targets. This includes supporting emerging markets manage a just transition to net zero, while supporting their continued economic growth.

"As a long term, responsible investor, Border to Coast is committed to working with other investors, governments, and regulators to deliver real economy emissions reductions."