Scottish Widows is putting £1.4bn (€1.6bn) in environment and climate investments as it creates four new environmentally focused funds to direct pension investments into companies striving for solutions to environmental issues, including greenhouse gas emissions, food insecurity, deforestation, and water pollution.

One of the funds is the Global Environmental Solutions (GES) Fund which targets companies creating solutions to these problems such as better alternative energy generation, sustainable infrastructure and transport, biodiversity preservation, and sustainable agriculture.

Maria Nazarova-Doyle, head of responsible investments and Stewardship at Scottish Widows, said: “With the launch of our new fund, we’re taking steps ourselves towards driving major investment into better outcomes for the environment as well as our customers.”

In addition to the GES Fund, Scottish Widows launched three regional funds to aid in the company’s decarbonising efforts. These are to be managed by BlackRock and Abrdn, and their targets are companies pushing the transition to a low carbon economy.

The three funds are to work towards the reduction of Scottish Widows’ carbon footprint by half by 2030, with the eventual goal of being carbon neutral by 2050 in mind.

Carbon pricing is key to combating climate change, says LGIM

Inaction in accurate carbon emissions pricing is delaying a successful and timely transition to a carbon neutral world, according to a recent report published by Legal & General Investment Management (LGIM).

As the window of opportunity to combat climate change within 1.5°C continues to shrink, the most effective way to slow the effects of carbon emissions is to adequately apply carbon prices to emissions, the report found.

Currently only 23% of emissions are priced. The issue is no longer the cost associated with lessening carbon emissions, but with the ability to quickly deploy capital into low carbon energy systems; a problem a more aptly utilised carbon pricing market would help solve, LGIM stated.

With only 4% of emissions being accurately priced in the range that aligns with the Paris Agreement’s 1.5°C mark, there is a risk that an acceleration of efforts to catch up with what should have been a decade-long transition to net zero will lead to a chaotic and disorderly move within the next 12 years, the manager’s research found.

Nick Stansbury, head of climate solutions at LGIM, believes that an economically smooth transition is no longer possible in order to reach the goals currently set.

“Global emissions are on track to reach all-time highs, and we have observed little tangible evidence that this trajectory is likely to change any time soon. Our modelling tells us that a delayed below 2°C scenario is economically disruptive and costly, and so delaying the more ambitious  target of 1.5°C is something that the world cannot afford,” said Stansbury.

“We believe the single most effective policy measure that the world could take to drive global emissions down, is to put an effective price on them. A meaningful carbon price, covering all global emissions by an explicit tax or a cap and-trade mechanism, is desperately needed to induce the immediate and dramatic capital allocation required to  build a low carbon energy system in our view,” he added.

Phenix Capital issues carbon neutral metrics

Phenix Capital Group has released a report detailing data points from all levels of net zero-aligned funds so institutional investors can better discern where to invest in order to slow the effects of climate change.

This comes a week after the Intergovernmental Panel on Climate Change (IPCC) clarified that there was little chance of minimising warming to 1.5°C by 2050, as currently warming is at 1.1°C.

Warming higher than 1.5°C could lead to irreversible effects in the global ecosystem, and the threshold is currently slated to be crossed in the 2030s, the report stated.

Phenix stated that in order to stave off the effects of climate change, investments in clean energy must quadruple by 2043, and $3.5trn annually in capital will be needed to create a net zero economy, according to the Energy Transitions Committee.

The report also found that out of 729 net zero-aligned funds, 58% are open to investment and 31% of the funds tracked by Phenix Capital have a net zero focus.

The report also found that €289bn has been raised towards net zero-aligned funds, with €162bn raised by 228 global-focused funds.

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