The South Yorkshire Pensions Authority (SYPA) has reviewed its responsible investment and climate change policies at a meeting last week, in which it set a goal to become carbon neutral by 2030.
The £9bn scheme, which caters for more than 161,000 members, held a pensions committee meeting last week in which Sharon Smith, head of investments, presented the scheme’s Corporate Performance Report.
The report – which showed data for the first quarter of the 2020/21 financial year – revealed that the fund had approximately 60% of its assets managed in pooled structures provided by Border to Coast and had an estimated funding level at the end of Q1 of 101.5%.
The report, which also included a risk register, showed that as at 26 August 2020, the impact of climate change on the value of the fund’s assets and liabilities had led to an increased gap between the two.
Figures of this gap were not disclosed to IPE, but the risk register also revealed a reduction in the level of investment income as companies failing to adapt to a low carbon economy become less able to pay dividends.
As such, SYPA conducted an annual review of its policies in relation to responsible investment issues including its climate change policy.
These reviewed documents set a framework through which the scheme adopts an environmental social and governance (ESG) approach to its investments, it said.
Carbon neutral by 2030
SYPA – which claims to be one of the first local government pension scheme (LGPS) administering authorities to adopt a climate change policy and to adopt the reporting requirements of the Task Force on Climate Related Financial Disclosure (TCFD) – has decided to set a goal to achieve net zero carbon emissions by 2030.
Mick Stowe, SYPA’s chair councillor, has called on the Authority’s officers to come up with an action plan within six months.
He said: “We have acknowledged for some time that climate change is the biggest risk facing the value of our scheme members’ pension savings, this is the next step along the road to effectively managing that risk. We cannot do this on our own and we will be looking to bring our colleagues within the Border to Coast Pensions Partnership on this journey with us”.
Smith has also been tasked with approaching Border to Coast to develop a “climate product” and to develop a comprehensive impact reporting framework.
This framework will aim to cover all of the fund’s investments in order to provide a more comprehensive picture of the overall level of emissions from the portfolio alongside a range of other impacts related to the Sustainable Development Goals, the fund said.
This work will be commissioned later this financial year with a view to producing the first comprehensive report on the fund’s carbon position at the end of the 2020/21 financial year, it added.
“This work will enable us to provide a more balanced picture which properly reflects both the positive steps we are already taking such as significant investment in renewable energy and our more traditional investments in listed companies,” Stowe said.