LONDON (Reuters) – Companies and asset managers must show progress towards climate goals by 2022, Brunel Pension Partnership, one of Britain’s biggest pension fund managers, said on Monday, or the fund will withdraw its investment.
Policymakers such as outgoing Bank of England Governor Mark Carney are pushing investors to do more to ensure their portfolio choices help to meet the 2015 Paris Agreement to combat climate change, by limiting warming to well below 2 degrees Celsius, preferably to 1.5C.
Brunel, which manages 30 billion pounds ($39 billion) in assets for 10 local government schemes, said in its first climate policy it was aiming to influence companies’ and investment managers’ behavior.
“Climate change presents an immediate systemic and material risk to the ecological, societal and financial stability of every economy and country on the planet,” the policy document said. “It is therefore a strategic investment priority for us.”
Brunel will require its “material holdings” to cut carbon emissions by 2022. It said it could vote against the re-appointment of board members or divest from companies if they fail to act.
Scandinavian pension funds, church groups and university endowments around the world have pulled out of fossil fuel investments, according to research by Fossil Free. But most large British pension funds prefer to engage with companies to persuade them to change their approach.
Brunel’s exclusion threat extends beyond energy companies to other sectors such as car makers and aviation, Faith Ward, chief responsible investment officer, told Reuters.
Brunel uses 130 asset managers and may strip them of their investment mandates if they haven’t put the assets on a path to align with policies limiting warming to 2 degrees or less by 2022.
“We will be putting a lot of pressure on our managers to look at their portfolios,” Ward said.
Reporting by Carolyn Cohn; Editing by David Holmes