Also commenting on Phoenix Group’s commitment, Richard Curtis, Co-Founder at Make My Money Matter said:
“Pensions used to be the last thing I’d ever talk about – the worst thing to bring up over lunch – but with announcements like these from Phoenix Group, they’re fast becoming the first, because they’re such a powerful tool in changing the world. Phoenix Group’s pledge to halve their carbon this decade sets the pace for other pension providers ahead of COP26, and with an additional £160bn now working towards tackling the climate crisis – not fuelling the fire – their pledge proves how powerful our pensions can be.
“That’s the good news – but there’s still nearly £2tr in UK pension schemes that don’t align with the Paris Climate Agreement target of limiting global warming to 1.5°C – and this has to change. I hope leadership like this by Phoenix Group encourages others across the industry to step up to the plate fast and make robust net zero commitments ahead of COP, so we can all have pensions to be proud of. With sustainable pensions, we can make sure our money helps build a healthy planet, as well as healthy returns.”
Interim targets towards net zero
In December 2020, Phoenix Group committed to their investment portfolio becoming net zero carbon by 2050 and this is aligned with the ambitions of the Paris Agreement.
Phoenix Group recognise the importance of setting interim targets to ensure there is a clear pathway to their overall net zero objectives. The interim targets announced today will include:
- By 2025 – A reduction of 25% in the carbon emission intensity of their investments. This will cover all listed equity and credit assets where Phoenix Group can exercise control and influence (c£160bn)
- By 2030 – A reduction of at least 50% in the carbon emission intensity of their investments. This will cover all assets at a Group level where Phoenix can exercise control and influence (c£250bn).
In order to achieve the targets, Phoenix Group believe government policy, technology, consumer appetite and business response need to shift. Phoenix Group will be looking to play a leading role in informing the debate and supporting the case for change, and will keep their targets under regular review. Their net zero commitment includes decarbonisation of investment portfolios, investment in climate solutions, and engaging actively with investee companies to support and accelerate the transition of their business models. Phoenix Group’s approach is ‘engagement first’; divestment will always be their last resort if corporate management is not responsive, and they have a policy on specific exclusions.
Phoenix Group will be expressing emissions in terms of carbon intensity (i.e. tCO2e/£1m) rather than total absolute emissions, in line with industry standards for portfolio decarbonisation, and are committed to regular, public reporting against its targets. Last year they also set a target for their operation to be net zero carbon by 2025 and are on track to achieve this.
Responsible investment
Phoenix Group are making strong progress in comprehensively integrating environmental, social and governance (‘ESG’) considerations into their end-to-end investment strategy, risk management and governance processes. Their Responsible Investment strategy includes four pillars:
- Strategy and governance
- Stewardship
- ESG Integration
- Decarbonisation of investment portfolios
Phoenix Group invested over £700 million in sustainable assets in the first half of 2021 alone and recently provided £50 million in long-term financing to a not-for-profit Welsh Housing association to build around 1,000 new energy efficient, affordable homes. Standard Life, part of Phoenix Group, launched a Sustainable Multi Asset Fund default fund for workplace pension clients and their scheme members in December last year. Standard Life are now looking to evolve their existing range of investment solutions to increase the ESG focus.
Phoenix Group have also launched a dedicated Venture Capital fund for policyholder funds with an initial allocation in excess of £100m which will be a key enabler to helping Build Britain Back Better, whilst providing policyholders with a diversified source of sustainable returns that will support Healthcare, Green Energy and FinTech entrepreneurs up and down the country.
