Pensions pool Border to Coast has £8.3bn invested in climate solutions, following its 2021 commitment to drive the transition to a low-carbon economy.
Breaking this down, £6.9bn is in equity and fixed income assets that aim to reduce carbon emissions, while its private markets deployment has more than doubled in 17 months to £1.4bn – as it was £600m at the end of March mast year.
“While climate change creates risks to society and investors, there are also investment opportunities related to the transition to a net zero economy,” said Joe McDonnell, chief investment officer at Border to Coast.
This, he added: “Will require new business models, new companies and new infrastructure, which represent potentially attractive investments. As long-term investors, we are able to support partner funds in providing capital to support this transition.”
The Leeds-based pool is the largest asset manger outside of London and Edinburgh, and has aligned to recommendations of the Task Force on Climate-related Financial Disclosures.
It highlighted the progress being made in three key areas connected to the transition:
One, net-zero targets and metrics cover all listed equity and a proportion of the pool’s fixed income assets, accounting for 57% of total assets under management.
Two, engagement is taking place with companies representing 73% of the financed emissions in Border to Coast’s portfolio.
Three, a 47% reduction in financed emissions compared to the 2019 baseline. While subject to fluctuations, this is on-target for a 53% drop by 2025, the pool said.
Carbon intensity measures, including weighted-average carbon intensity and carbon intensity, are 6% to 8% lower than at the end of March last year.
And 44% of the financed emissions in Border to Coast’s portfolio are emitted by companies considered to be aligned or aligning with net zero.
As part of its investment strategy, Border to Coast also said it is committed to a just transition by also considering social risks and opportunities in investment decision making.
As part of this, in May 2022 the pool joined the Emerging Markets Just Transition Investor initiative, as a founding member.
This group of 12 UK pension pools and funds with assets of £400bn recognises that different countries and different industries will decarbonise at different paces, warning against a ‘one-size-fits-all’ approach.
It has drafted principles that encourage and articulate the integration of social risks and opportunities into decarbonisation strategies.
Jane Firth, head of responsible investment at Border to Coast, added: “We have continued our journey to address the carbon footprint of our investments – by identifying and assessing climate risk, adapting our investment strategy, engaging with the companies we invest in, peers and regulators, and transparently reporting on our progress.
“We are actively managing the risks and opportunities and are making good progress towards our commitment to net zero.”
Read portfolio institutional’s exclusive interview with Joe McDonnell in the September issue.
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