The Church of England Pensions Board is a decade ahead of its 2050 net zero targets, according to its 2021 stewardship report.
The report said that despite the challenges set by the Covid-19 pandemic, the significant reduction and/or exclusion of companies that failed to align with the transition to net zero were at the root of its success.
The board has adopted the Net Zero Investment Framework and imposed an ongoing target of 7% year-on-year reduction in weighted average carbon intensity.
“Excellent investment returns were built on a foundation of responsible investment for a just and sustainable world,” said chair Clive Mather.
The fund reduced exposure to oil and gas companies to 0.28% in 2021, while participating in an engagement initiative with Shell.
This year will be “an inflection point for responsible investors, with the war in Ukraine, and updated climate science from the IPCC challenging the fundamentals of how we as investors should act and the interventions we can make” said Adam Matthews, chief responsible investment officer.
A key priority will be how the board can participate with other investors in supporting a just transition in emerging economies.
“Having created the first net zero standard for oil and gas companies, we need to drive change in those sectors that demand energy such as autos and steel as well as focus on the role mining needs to play in providing the minerals for the transition,” said Matthews.
“This continues to be an ambitious stewardship agenda that positions the fund to navigate, in our members’ interests, the risks and opportunities while supporting a just and sustainable world.”
The board is the trustee of three Church of England schemes managing £3.7 billion assets on behalf of 41,400 members, as of 31 December 2021.