Border to Coast Pensions Partnership, a UK pensions pool, has strengthened its responsible investment (RI) policies to develop and further embed ESG into investment management.
The update of all RI policies, including voting and climate change policies, is part of Border to Coast’s annual review. This is carried out in conjunction with its 11 partner funds which represent over one million members, 2,700 employers and have approximately £58bn (€67.7bn) in investments.
Jane Firth, head of RI at Border to Coast, said: “Our strengthened approach to voting and exclusion thresholds demonstrates our commitment to net zero.
“As long-term investors, we believe it’s critical that the firms we invest in on behalf of our partner funds are appropriately managing the risks of climate change and are adopting robust climate-change targets and policies.”
She noted that voting is “essential” to managing climate risk and an important means of influencing company targets and policies. She warned, however, that not every climate resolution will be supportable. “It is important to explain our rationale on those occasions we vote against,” she said.
Firth said the pool’s new exclusion policy covering coal power generation reflects Border to Coast’s support for a just transition, recognising that countries have differing transition timelines and economic dependencies on coal.
Within Border to Coast’s strengthened RI policy, the pool will generally vote in favour of shareholder resolutions that are aligned with the objectives of the Paris Agreement, taking a ‘comply or explain’ approach, publicly disclosing its rationale if it votes against.
Border to Coast will not invest in organisations where thermal coal power generation is more than 50% of revenue of companies listed in developed markets, and 70% for companies in emerging markets. It will also not invest in thermal coal and oil sand production representing more than 25% of revenues.
The pool will also vote against the chair of the board where a company covered by Climate Action 100+ fails indicators of the net-zero benchmark covering emission-reduction targets and from 2024 decarbonisation strategy.
Where management put forward a Say on Climate resolution, Border to Coast will vote against if, following its analysis it is found not aligned with the Paris Agreement.
The pool will also vote against the chair of UK nomination committees if the board is composed of less than 40% female directors, and for FTSE 250 companies if the board does not have at least one person from an ethnic minority background, unless plans to address this situation have been disclosed.
An exclusion for controversial weapons has been broadened to cover landmines and biological and chemical weapons. This covers international treaties and conventions that the UK has either ratified or to which it is a state party.
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