Phoenix Group launches new Climate Aware Equity Benchmarks as part of portfolio decarbonisation strategy

by | Jun 5, 2024

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Phoenix Group has today launched a bespoke “Climate Aware” index series in collaboration with FTSE Russell, an LSEG business. The FTSE Phoenix Climate Aware index series will focus on national and regional markets and will be grown over time.

This launch forms part of Phoenix Group’s decarbonisation strategy for equity investments, in line with its Net Zero transition Plan published last year. The index series will enable Phoenix to introduce benchmarks that aim to increase the resilience of customers’ portfolios to climate change related transition risks.

The indices and benchmarks developed with FTSE Russell aim to protect policyholder portfolios against the risk of climate change by reducing exposure to companies which might face negative impact for lacking well-developed plans on how to successfully navigate the climate transition. The construction follows core principles set by Phoenix which includes the pace of the decarbonisation trajectory and the inclusion of forward-looking data, ensuring that climate risk management and that engaging for change are at its core. Phoenix’s exclusion policy is embedded within the design removing companies engaged in products and business practices that are not aligned to Phoenix’s principles.

 
 

In line with its Net zero Transition Plan, Phoenix will be undertaking a phased introduction of these benchmarks across multiple regions for customer portfolios, starting with US equities.

Sindhu Krishna, Head of Sustainable Investment at Phoenix Group, said:  

“At Phoenix, we believe that transition risk will be a key climate risk factor over the coming decades as governments, corporates and customers respond to the climate emergency. Without management of those risks, our policyholders are likely to be exposed to a higher probability of sub-optimal investment performance.

 
 

“Creating these new benchmarks will also allow us to ensure that our asset management partners follow a consistent approach to implementing our climate risk management strategy across the assets they manage on our behalf.

“We are delighted to have worked with FTSE Russell to create the new FTSE Phoenix Climate Aware Index Series to create benchmarks which aim to manage and mitigate risk as we continue to seek optimal outcomes for our customers.”

Solange Le Jeune, Head of Equity Sustainable Investment Product at FTSE Russell, said:  

 
 

“We are thrilled to be working with Phoenix Group on the creation of these new indices. These allow Phoenix to take a climate risk mitigation approach in its core equity investments. They enable the mainstreaming of decarbonisation strategies and portfolio-level improvements on forward-looking climate parameters. This is achieved while allowing minimal deviation from the parent benchmarks. This collaboration reflects FTSE Russell’s commitment to supporting investment clients across all markets, and those, like Phoenix, with an ambition to create innovative solutions to address climate risks.’’

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