Church of England Investment Funds Divest From Climate Underperformers, Achieves Progress in Others
The Church of England’s National Investing Bodies (NIBs), comprised of the Church Commissioners for England, the Church of England Pensions Board and CBF Church of England Funds announced the addition of nine companies to its restricted list, due to the companies’ failure to meet the standards of the NIBs’ 2020 climate change hurdles. The NIBs also announced that twelve companies avoided being added to the list due to positive changes, including setting emissions targets and improving climate-related disclosures and transparency.
Bess Joffe, Director of Responsible Investment for the Church Commissioners for England, said:
“We are pleased with the response we’ve had from the 12 companies that improved their performance over the past year. Engaging with companies to align with the goals of the Paris Agreement helps ensure we reduce our portfolio’s emissions without limiting our universe of investable companies. However, those companies that fail to take adequate action to mitigate climate change have no place in our portfolio.”
The NIBs are founding members of the Transition Pathway Initiative (TPI), a global, asset-owner led initiative which assesses companies’ preparedness for the transition to a low carbon economy, and of Climate Action 100+, an investor initiative targeting the world’s largest corporate greenhouse gas emitters to promote action on climate change. According to NIB, the standards were developed using Transition Pathway Initiative (TPI) data, followed by engagements with companies that were at risk of not meeting the emissions standards, in close collaboration with CA100+ dialogues. Following the engagements, nine companies were restricted, two were put under review and 10 improved their disclosure, governance or strategy sufficiently to avoid restrictions this year.
The funds have committed to divest any holdings they have in the restricted companies as soon as possible. According to the NIBs, this marks the first time that they are restricting companies that fall short of specific carbon emission standards.
Restricted companies include Berkshire Hathaway, American Electric Power, and Korea Electric Power Corp. The NIBs noted that Duke Energy and Vistra Energy are companies that made changes following engagement, announcing 2050 net zero targets in September 2019 and 2020, respectively, and that Power Assets Holdings and Rosneft, both improved climate-related disclosure significantly.
Adam Matthews, Director of Ethics and Engagement for the Church of England Pensions Board, commented:
“As a fund we are committed to net zero by 2050 or sooner and this is a further step in aligning our investments to that objective. It is also a key part of meeting the commitments we have made to our beneficiaries and stakeholders. We have demonstrated it is possible to secure change in company behaviour and we will continue to engage robustly with companies that could fall short of our hurdles in the next three years as we continue to play our part in supporting the low carbon transition.”
Helen Wildsmith, Stewardship Director – Climate Change, CCLA, added:
“Actively engaging with US electrical utilities via Climate Action 100+, is one of the ways in which the NIBs are meeting their commitments as members of the UK and Canadian government-led Powering Past Coal Alliance.”