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Church of England Pensions Board ten years ahead of net zero target

05 May 2022

Investments in green energy nearly 12 times those in fossil fuels

Alamy

Extinction Rebellion protesters hang a banner beneath Tower Bridge in London last month

Extinction Rebellion protesters hang a banner beneath Tower Bridge in London last month

THE Church of England Pensions Board is currently ten years ahead of its target to become net zero by 2050, its latest investment statistics suggest.

In its second annual stewardship report, Investing for a Just and Sustainable World, published on Thursday, the board reports that the carbon intensity of its investment portfolio reduced by 21 per cent, from 93.6 tonnes of carbon dioxide per £1 million of revenue in 2020 to 74.3 tonnes in 2021, placing the board ahead of its seven-per-cent yearly trajectory, and closer to its net-zero aligned target for 2032.

The report, submitted to the Financial Reporting Council, shows that, by the end of 2021, the Pensions Board was responsible for £3.7-billion’s worth of assets across three pension schemes. Total investments for the schemes, which are pooled, returned 13 per cent; its other assets returned 18.5 per cent. Most of its holdings are in public equity (£1.449 billion).

Investment in oil and gas companies decreased by a fraction of a per cent, from 0.3 per cent of the fund in 2020 to 0.28 per cent in 2021, i.e. about £10 million. The oil and gas holdings in 2019 were 1.4 per cent of the fund.

By comparison, the board held £58 million in climate solutions and green revenues investments in public markets and a further £60.8 million in private markets — just short of 12 times the total value of its oil and gas investments.

The issue of climate lobbying was raised by the board in meetings with 65 listed companies in the United States, Asia, Australasia, and Europe, the report says.

 A graphic from the report

In 2021, the board was also among the first signatories of the new UK Stewardship Code; helped to create a common Net Zero Investment Framework for pension funds; and secured significant funding to scale the Transition Pathway Initiative (TPI) from assessing 500 companies to assessing 10,000 (News, 29 November). Last year, the TPI assessed 479 companies (worth £10 trillion) across 16 sectors in 46 countries.

On issues of housing, the board wrote to 18 housing associations (in 12 of which it holds bonds) about the rights of tenants to safe housing, in line with the Archbishops’ Commission on Housing’s Coming Home report. Ten per cent of its £259 million property investments do not yet have a net-zero target; most (40 per cent) have a target of 2050.

The board disinvested from 467 companies on ethical or responsible investment grounds last year, including 28 companies on their climate-change record. Most of the exclusions, however, related to gambling (113), alcohol (87), and firearms and defence (83).

Clive Mather, who chairs the board, and its chief executive, John Ball, write in their foreword that, while the report covers 2021, the Russian invasion of Ukraine “calls into question how the investment community assesses the actions of governments and economies that break international norms. Due to an existing ethical exclusion, the board was not invested in Russian government debt when the invasion occurred. We had no exposure to sanctioned companies, and exited from the few we were invested in the morning of the invasion.”

In 2020, the General Synod set a 2030 target for net-zero carbon emissions for the Church of England (News, 14 February 2020); the motion omitted the national investing bodies (which include the Pensions Board), however, because the global investment markets meant that the 2050 target represented “a similar balance between achievability and prophetic emphasis”.

The chief responsible-investment officer of the Pensions Board, Adam Matthews, said: “There is a big difference between the net-zero target of an investment portfolio, where we don’t have operational control over emissions, versus the target of the operations of the Church, where we do have operational control.

“The General Synod paper specifically put the investments of the National Investing Bodies out of scope of what became the 2030 target. We have a 2050 target, and have been able to report against the progress we have made to date, which means we are ten years ahead of where we need to be.”

Campaign calls for windfall tax on fossil-fuel giants. Church Action for Tax Justice (CATJ), a programme of the Ecumenical Council for Corporate Responsibility (ECCR), is calling on the Government to levy a windfall tax on fossil-fuel giants. On Tuesday, BP reported an underlying profit of £4.9 billion in the first three months of 2022, compared with £2 billion in the same period last year (News, 8 March, 2019).

The CATJ programme manager, Cat Jenkins, said: “Right now, we’re seeing families struggling with some of the worst financial challenges for decades, whilst at the same time the rate of tax on the working poor-and-middle has been hiked to eye-watering levels. In a fair society we should not be allowing corporate profiteering at the expense of the population, and we’re calling on the Government to urgently redress the balance.”

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