UK pension pool Brunel Partnership has transferred more than £ 3 billion (€ 3.5 billion) to the new Paris-aligned benchmark series it developed with FTSE Russell.
The following five client members of the Brunel Pension Partnership will change their allocation from passive funds to new benchmarks:
- Wiltshire Pension Fund;
- Oxfordshire Pension Fund;
- Environment Agency pension fund;
- Devon Pension Fund;
- Avon pension fund
LGIM manages the Brunel passive equity funds by now adopting the new benchmarks.
FTSE Russell’s Paris-Aligned Benchmark Series aims to achieve a 50% reduction in carbon emissions over 10 years and incorporate forward-looking measures and governance protections from the Transition Pathway Initiative (TPI) .
TPI provides assessments of how the largest and most carbon-exposed companies are managing the climate transition.
Exposure to a given component of the index increases or decreases based on several targets, covering fossil fuel reserves, carbon reserves and green revenues, as well as forward alignment with the Paris targets.
The indices also set a limit on the active weighting of components of the banking sector, given that finance financing of large carbon emitters is an important driver of climate change – but is poorly reported.
The indices are designed flexibly, to allow them to evolve as the data improves, in line with research developments.
Faith Ward, Director of Responsible Investment, Brunel Pension Partnership, said: “The £ 3bn transition to the new Paris-aligned benchmarks is an indication of how the indices can be an important part of the solution to climate change. “
“These indices leverage the data we already have, including forward-looking metrics, including TPI metrics. “
James Morrish, chairman of the Devon Pension Fund’s investment and pension fund committee, said: “This will significantly reduce the fund’s exposure to fossil fuel companies, such as Shell and BP, and will also support companies that perform the transition of their activities in accordance with the objectives of the Paris Agreement on climate change. ‘