Published
15th December 2021
Essex Pension Fund recognises both our responsibility to be a trusted investor and the range of potential long-term risks associated with climate change.
As such we have prioritised these important considerations when reviewing our Investment Strategy and, following on from a full stakeholder consultation in the summer of 2020, developed our ‘Responsible Investment (RI) Policy’ based on a set of RI Investment Beliefs and Priorities of which climate change is one.
The Fund’s direct investment in fossil fuels is steadily decreasing and as of 30 September 2021, was 0.05% of the Fund compared to 0.22% as of 30 September 2015. A recent decision by the Investment Steering Committee (ISC) will see in the near future this figure decrease further as the Fund continues to work through its de-risking programme.
Similarly, we are dedicated to investing in reforestation and renewable energy, with the Fund’s investments in sustainable timber and renewable energy increasing from 4.1% as of 30 June 2019 to 8.1% as of 31 March 2021. The ISC just recently agreed further top up commitments to some of its infrastructure funds and are exploring with its Advisers the options around allocating to a dedicated green infrastructure fund.
The Fund sees this as the start of our journey and recognises both the long-term risks associated with climate change and the importance of engaging with companies it is invested in and is keen to work collaboratively with others towards achieving our ultimate goal of reaching net zero.
The ISC is also committed to demonstrating they are responsible investors and have committed to becoming a signatory to the UK Stewardship Code and have set a challenging workplan to achieve this.
The Fund is currently reviewing each of the Investment Managers in turn to ensure that the mandates align with the Fund’s RI Policy. To this end, the Fund during 2021 have engaged with all its active Equity, Bond, and Property Investment Managers which accounts for around 80% of the Fund’s assets under management and are also working collaboratively with its index tracking manager to develop a solution that better aligns with its RI beliefs and priorities.
In 2022 the Fund is committed to engage with the remaining Investment Managers’ who manage the alternative part of the Portfolio.
Over the last few months, the ISC have also dedicated a lot of time to understanding the requirements around the Task Force on Climate related Financial Disclosures (TCFD), the result, the recent agreement that the Fund would monitor a set of climate metrics around: greenhouse gas emissions; carbon footprint and intensity and commitment of the Investment Managers to aligning to net zero targets.
If you would like more information about our investment strategy and RI Policy, please review our Investment Strategy Statement.
I hope this reassures you that Essex Pension Fund takes it responsibilities seriously and that its planned approach to RI will ensure a better tomorrow for all our members.
