The Church of England Pensions Board (CEPB) has published its inaugural Climate Action Plan, setting out its commitment to reach net zero in its portfolio by 2050 or sooner, both across operations and investments.

The CEPB, which manages approximately £3.2bn of assets under management, said the “overarching aims” of the climate action plan are to serve its beneficiaries by addressing climate risk and realising “competitive” returns for its members.

It also aims to play a leadership role in the expectations of its beneficiaries, aimed at limiting global warming to no more than 1.5°C above pre-industrial levels. In addition, it wants to meet net zero in its investment portfolio by 2050 or sooner.

The new plan focuses on two key themes: transitioning the economy away from fossil fuels, and aligning financial flows with the aims of the Paris Agreement, including increasing investment and financing for climate solutions, in line with its 42,000 member interest.

In May 2023, CEPB said it will divest from its remaining oil and gas holdings, excluding companies primarily engaged in the exploration, production and refining of oil or gas, unless they are in “genuine alignment” with a 1.5°C pathway by the end of 2023.

The climate action plan will address these themes through six strategic pillars. The first pillar being a commitment to act, which would consist of establishing targets, commitments and governance to oversee the strategy.

Adam Matthews at CEPB

Adam Matthews at CEPB

In addition, the board said it would carry out public policy engagement to ensure the policy environment enables the transition into the real economy, challenging negative climate lobbying and encouraging positive climate lobbying from portfolio companies.

It also committed to “understanding and driving the transition” including building the tools, knowledge and data required to direct capital towards the transition to net zero.

The board said it would also conduct “robust stewardship and engagement” using the levers available to CEPB to engage companies to act on climate change and escalate where needed.

It also said it would conduct manager monitoring to ensure the asset managers we appoint are investing in line with our investment beliefs and strategies as they relate to climate change.

Lastly, CEPB said it would align its portfolio with net zero by assessing, reporting on and aligning the carbon footprint of its investments by asset class with a transition to net-zero emissions, including stress-testing.

Adam Matthews, chief responsible investment officer at CEPB, said: “In serving our pension scheme members, we are focused on protecting their retirements in the long term.”

He added that climate change is a “clear and present” risk that will be “far more damaging” to investment portfolios and to the global economy if “we fail to transition to net-zero in an orderly, timely way”.

He said: “This is why our climate action plan focuses on key systemic risks like demand for fossil fuels, corporate climate lobbying, climate finance in emerging markets, and seeking strong ambition from companies.”

Read the digital edition of IPE’s latest magazine