As a long-term investor the Fund has a duty to engage with the companies we invest in on environmental, social and governance (ESG) issues, and to work with others to effect change on ESG issues.
What does this look like in practice?
There are several things that we as an investor can do to make changes for the better.
We can invest directly into companies or funds that are ESG focused. The Fund has committed over $200m to renewable assets in the last two years.
There are limits to the influence we can achieve as a single investor and believe greater progress can be made through collaboration with other investors. To accomplish this, we are members/signatories of the following ESG initiatives:
• Climate Action 100
• Carbon Disclosure Project
• UN Principles for Responsible Investment
• Local Authority Pension Fund Forum (LAPFF)
By working together, we and other investors can use our collective size to influence decision making and promote the highest standards of corporate governance and corporate responsibility.
Through our various signatories we have helped action the following initiatives:
• Rio Tinto– Has exited from mining coal and committed to an asset by asset review to set emissions reduction targets.
• Royal Dutch Shell– One of the world’s oil and gas supermajors, released a joint statement committing to a range of industry leading climate commitments, including emission reduction targets.
• ArcelorMittal– After consistent engagement with LAPFF and other investors the company announced its aim to be carbon neutral in European operations by 2050.
• PepsiCo– The company committed to reducing use of virgin plastic across its portfolio by 35% by 2025. This pledge builds on the company’s prior commitment to the UK Plastics Pact to increase its use of recycled content in plastics packing to 30%.
• Maersk, the world’s biggest shipping company, committed to net zero emissions by 2050.
Mandates & Fund Managers
Through our Fund Managers we can engage with companies more directly raising concerns and meeting with Senior Management and Executives. For example, our Fund Manager working with one of the biggest automotive companies helped ensure further health and safety practices were implemented to increase protection of staff.
Fund managers report their engagements on a quarterly basis so we can monitor engagement activity.
The consideration and application of ESG can be different for different asset classes. So for our property assets we can consider renewables and carbon footprint. Our property investments have had a 9% reduction in carbon emissions while 100% of our landlord electricity has been procured from renewable energy.
For more information visit the Responsible Investment section of our website.