Responsible investment activities

We believe climate change presents a significant financial risk and that a low carbon world will likely be a more financially stable world. That’s why we’ve set an ambition for our investments to be net zero by 2050, if not before.

We were one of the first pension funds in the world to recognise the potential impact of climate change for long-term investors. And we’ve been actively working with our investor partners for over a decade to address it.

Here are some examples of how we’re addressing climate change:

• We supported the Paris Agreement to limit global temperature rises to 2⁰C or lower.
• We either helped establish or are an active supporter of a number of initiatives designed to bring industry leaders together to tackle climate change. For example, we co-founded the Institutional Investor Group on Climate Change (IIGCC). IIGCC provides a forum for European institutional investors to engage with policymakers on the long-term risks and opportunities of climate change.
• We’re an active supporter of Climate Action 100+ – a collaborative engagement of major global investors targeting the 100 largest emitters of carbon in the global economy.
• We’ve invested approximately £2bn in renewables and clean energy, like wind and solar power.

You can find more on our approach and progress at our journey to net zero.

It’s important that the businesses we invest in comply with the principles of good governance and have appropriate oversight in place. It helps our long-term corporate performance and enhances the value of our investments.

We engage with companies and policymakers on corporate governance issues like a company’s leadership, board composition, and executive pay.

See our Stewardship Report for more information on how we’ve tackled executive pay.

We make full use of our rights as a shareholder of the companies in which we invest directly to secure the best returns for our members.

We work hard to assess how our investments manage ESG factors and, once we have invested, we engage to encourage improved management and disclosure of ESG issues. This is important in our direct investments as we expect to own them for many years and therefore have the ability to directly influence board composition, strategy and executive pay.

See more on our direct investments in our Stewardship Report.