Key highlights include
60 per cent of portfolio companies in private markets now covered by carbon data, up from 23 per cent in 2022
90 per cent of companies on our Climate Watchlist reported their environmental impact data to CDP in 2023, up from 84 per cent in 2022
67 per cent of the Fund categorised as ‘Net Zero, Aligned, Aligning or Committed to Align’ with the Paris Agreement, up from 59 per cent since our 2020 baseline
A reduction of 53 per cent in our offices’ Scope 2 location-based emissions since our 2019/20 baseline year, and continuing to procure 100 per cent renewable electricity (100 per cent renewable electricity also secured for our data centres)
The Pension Protection Fund (PPF) has today published its fourth annual Climate Change report, to disclose how the organisation responds to climate-related risks and opportunities in line with TCFD recommendations.
The report outlines further progress implementing the PPF’s Sustainability Strategy to “lead by example on sustainability” across the pension fund industry, with a focus on improved understanding of climate risk, especially from private markets, and ongoing commitment to prioritise engagement with its managers and portfolio companies to achieve sustainability objectives.
Claire Curtin, Head of ESG and Sustainability, said: “It remains one of our key priorities for the business to respond to and manage risks that arise from climate change. To do this we need to keep pushing for better information that will help us paint a more accurate picture of emissions across the Fund.
“With a sizable allocation to private markets, we have been focused on ways to improve our access to data from our private markets investments. Some examples include continuing to support eFront’s ESG Data Service for Private Markets and rolling out an Infrastructure transition questionnaire where we saw 100 per cent response rate from our managers. As a result of these efforts, we can now analyse three-quarters of the Fund on carbon-related information.”
The report also highlights PPF’s progress on engagement with managers and underlying issuers. Through PPF’s external managers and stewardship services provider, EOS, which sets out engagement expectations and informs voting recommendations at company AGMs, one third of companies on the PPF’s Climate Watchlist saw progress in their engagement objectives in 2023. To share its expectations with companies, the PPF has also updated its voting guidelines. These reflect and integrate various climate measures into its wider voting strategy, including identifying specific situations where the PPF will consider voting against management on issues including climate change.
The report also details the PPF’s progress in achieving more high-quality disclosure from issuers, deepening climate management beyond listed equities and driving better alignment with the goals of the Paris Agreement. Highlights include 90 per cent of portfolio companies in the PPF’s Climate Watchlist now reporting carbon emissions data, 60 per cent of private companies have carbon emissions data and 78 per cent of Infrastructure assets categorised as sustainable or with transition plans to decarbonise.
Last year, the PPF published its Sustainability Strategy, which brings together key elements of the way it approaches responsible investment, Diversity & Inclusion and community impact, as well as considering how to reduce its own operational impacts. The strategy is underpinned by the Five Capitals framework for sustainability, the PPF’s organisational values and an assessment of its most material ESG risks as a business.
Claire Curtin added: “We have also set high standards for ourselves on climate change. Our target is to reach Net Zero for our operations by 2035 or sooner. For our investments, we seek to contribute to the global transition to Net Zero through our portfolio and engagement activities. In the past three years, we’ve gathered climate assessments across every investment in the Fund so we can see how the Fund’s position aligns to Net Zero and the Paris Agreement. We’ve continually evolved this to reflect new methodologies for different asset classes and changes in our portfolios.”
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