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Our journey to Net Zero

Learn more about our Net Zero ambition and the progress we’re making

How will we do it?

To reach Net Zero we will:

  • Encourage the companies we invest in to transition towards a low-carbon world
  • Reduce the carbon footprint of our investment portfolio over time
  • Invest in assets that support the transition towards a low-carbon world, like renewables and clean technology

Society can’t divest its way to Net Zero and neither can we. We’ll encourage the companies we invest in to transition to Net Zero, rather than just divest from them. As a long-term investor, we have a responsibility to actively engage with these companies to drive positive change.

For more on our approach and detail on our progress, see our TCFD summary or our full TCFD report. The Task Force on Climate-related Financial Disclosures (TCFD) is an industry-led group that helps companies and investors understand their financial exposure to climate risk.

Our progress so far

  • May 2021: We announced our ambition for our investments to be Net Zero by 2050, if not before. This is in line with the Paris Agreement – a legally binding international treaty on climate change – and the UK government’s Net Zero commitment.
  • From 2021: We increased integration of climate and carbon considerations into our investment decision-making processes. This makes sure we’re considering our Net Zero ambition when we decide where and how to invest.
  • October 2021: We introduced a £500m Sustainable Growth mandate. This mandate invests globally in high-growth, private businesses that are developing ways to help companies and the economy decarbonise. Recently, this included investments in electric-powered aircraft and carbon capture and storage technology.

    This complements our existing renewable energy strategy. In March 2023, we had around £2bn of renewable energy and clean technology investments. This includes a 50% stake in Bruc Energy, which runs solar farms across Spain.
  • February 2022: We set our interim targets to cut the emissions intensity of our investments by 25% by 2025, and by 50% by 2030. These milestones will help us stay on track, keep ourselves accountable and measure our progress.
  • April 2022: We started developing better climate scenarios with the University of Exeter. These will help us better understand how our investments might perform in the future under a range of potential climate outcomes. We will then use this to inform our investment strategy.
  • May 2022: We introduced a new climate tilt – a carbon reducing investment benchmark – to a large slice of our equity investments in the Retirement Income Builder (the defined benefit part) and the Investment Builder (the defined contribution part). This will impact over £5bn of our investments and initially reduced emissions by at least 30%, and then by 7% each following year.
  • July 2022: We reported that we reduced our emissions intensity by around 4% since 2019 in our first mandatory 2022 TCFD report. Since then, we have improved our data and re-baselined our numbers. You’ll see how these numbers have changed below. While we were on track, we knew we needed to go further.
  • November 2022: We improved both our carbon emissions data and the methodology we use to calculate this. We then restated our 2019 and 2021 carbon emissions intensities based on this improved data and methodology, which fell by 3% and 13% respectively.
  • December 2022: We encouraged Cemex – one of the largest cement companies and one of our biggest polluters – to set more ambitious decarbonisation targets. Cemex is now set to reach its 2030 decarbonisation target five years earlier than originally planned and has introduced new lower-carbon concrete products.
  • December 2022: We reduced our emissions intensity by 21% since 2019 and are on track to meet our interim target of a 25% reduction by 2025. This is a reduction from 90 to 71 tonnes of CO2e per £m invested. Read more in our latest TCFD summary, or look at the full 2023 TCFD report for all the details.

Reaching Net Zero will be an ongoing journey – to achieve our targets, we need to reduce our emissions intensity by between 4.7% and 6.1% a year from our 2019 start point. We are on track so far, but we know this journey won’t be a linear one. Small changes to our portfolio can have a big impact on our carbon footprint.

We’ll update this page every year with our progress.

Your questions

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