Devon Pension Fund has joined the ranks of asset owners making net-zero pledges, setting a deadline of 2050 for this to be achieved.

Announced yesterday, the decision follows a meeting of the investment and pension fund committee last Friday, where committee members are said to have “signed up to a commitment drawn up by the Institutional Investors Group on Climate Change” (IIGCC).

The IIGCC has been developing a net-zero investment framework to help investors maximise the contribution they make in tackling climate change.

In a press release, Devon County Council also said the investment and pension fund committee had pledged to work with Brunel Pension Partnership to decarbonise all its current investments at a rate of 7% per annum and to increase investments into carbon solutions.

The £4.9bn (€5.7bn) pension fund has also committed to invest more than £200m in renewable energy infrastructure funds via Brunel, the asset pool it is a part of.

Councillor Ray Bloxham, chair of the investment and pension fund committee, indicated the local authority pension fund would not be jumping to exit certain sectors to achieve its net-zero goal.

“[S]imply pulling the plug on investing in carbon intensive industries isn’t the answer because they are inextricably linked to the very industries that are working to find sustainable solutions,” he said, giving the example of the steel industry, which was vital in the production of wind turbines.

“To achieve real emissions reductions, it is vital we engage with the companies we are invested in, to hold them to take responsibility for their product throughout its usage, not just in its manufacture,” said Bloxham. “By doing this we aim to contribute to making real carbon reductions globally.”

NBIM puts Japan’s Kirin on watch as firm exits Myanmar army link

The Norwegian oil fund has disclosed it is putting the Japanese drinks company Kirin Holdings under observation, because of its business partnership with the Myanmar army – a link the firm has vowed to sever following last month’s military coup.

Norges Bank Investment Management (NBIM), which runs the Government Pension Fund Global (GPFG), announced the decision this morning along with other ethically-motivated moves regarding the stock of Germany’s ThyssenKrupp and Atal in Poland.

The Norwegian central bank subsidiary – which had $277m (€230m) of equity investments in Kirin Holdings at the end of 2020, a 1.29% stake – said: “The Council on Ethics has recommended to place the company under observation based on Kirin’s business cooperation with an organisation with ties to the military in Myanmar.

“Kirin has recently announced an intention to end this business cooperation, and the implementation of this will be followed up as a part of the observation,” it said.

The Japanese company announced on 5 February that it was “deeply concerned” by the recent actions of the military in Myanmar, which it said went against its standards and human rights policy.

Norges Bank

“Anti-corruption is an ownership issue of priority for Norges Bank Investment Management, where we have presented public expectations”

Norges Bank Investment Management

As a result Kirin said it was terminating its joint-venture partnership with Myanma Economic Holdings Public Company, which provided the service of welfare fund management for the military.

The company said it had decided to invest in Myanmar back in 2015, believing it could contribute positively as the country entered an “important period of democratisation”.

NBIM also said its executive board had decided to follow up ThyssenKrupp through active ownership from the fund, after the Council on Ethics advised placing the company under observation due to unacceptable risk that it contributed to, or was responsible for, gross corruption.

“Anti-corruption is an ownership issue of priority for Norges Bank Investment Management, where we have presented public expectations,” NBIM said, adding that the bank had been in dialogue with the German company over a long period of time, and that the NBIM board had now requested it include the risk of corruption in special active ownership towards ThyssenKrupp AG over a period of three years.

At the end of 2020, the Norwegian sovereign wealth fund held $118m of ThyssenKrupp shares.

The Oslo-based manager also said its board had decided to revoke the 2017 exclusion of the Polish residential developer Atal, which had been banned from the NOK11trn (€1.1trn) GFPG because of “unacceptable risk that the company has contributed to serious violations of human rights through the use of North-Korean workers at construction sites in Poland”.

However, as a result of a resolution in the UN’s Security Council, all North-Korean workers had now been sent out of Poland, NBIM said, adding that there were therefore no longer grounds for excluding the company.

Exclusions dominate UK responsible investment funds

The Investment Association (IA), the UK’s asset management body, has for the first time published more detailed responsible investment fund data in line with the framework it produced in 2019, revealing that responsible investment funds under management grew 66% over the past 12 months, in comparison with 7% across funds overall.

Almost 60% of the £56bn is invested in equity funds, with 20% in bond funds and 20% in mixed asset funds.

Two thirds (66%) of responsible investment funds under managment “have a sustainability focus” and 72% exclude certain types of investments, with 42% doing both, according to the IA.

M&G sets out coal phase-out plan

M&G is planning to phase out investment in thermal coal by 2030 for developed countries and 2040 for emerging markets, it announced this week.

It said this was a key step towards achieving its goal of net-zero investment portfolio carbon emissions by 2050 at the latest.

As an asset owner, it would be implementing its approach to coal-related investments across its own internal investment portfolios over the coming year. As an asset manager it said it would be working with clients to align existing mandates and funds to the new position, with its approach to be implemented in two phases.

The engagement phase was beginning now, while in the second phase from March 2022 it would begin divestment in developed markets, with divestment in emerging markets following two years later.

The specific restrictions for coal-related investments are:

Power Generation 
  • New expansion
  • >30% coal share of revenue / mix of energy output
  • >10 GW capacity
  • 0% coal by 2030 OECD & EU / 2040 Rest of the world 
  • Mining*
    • New mines
    • >20MT production per annum
    • >30% coal share of revenue
    • 0% coal by 2030 OECD & EU / 2040 Rest of the world
    Other Sectors**
    • New expansion
    • 0% coal by 2030 OECD & EU / 2040 Rest of the world
    *Exemption permissible for power generation of 300MW or less  **Includes those sectors whose main business is not coal but they have coal-related operations (eg industrial operations which have coal power generation), according to coverage provided by ISS/MSCI and the Global Coal Exclusion List.

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