Top Pension Funds Pledge To Reach Net Zero Carbon Emissions By 2050
The growing threat of climate change and its impact on the world has motivated world leaders and industry influencers to commit to practices that aim to lessen the impact of global warming.
One of the latest sectors to adopt climate change mitigation is pensions, with a new net zero 2050 investment framework that was recently launched by the Institutional Investors Group on Climate Change (IIGCC). Their pledge outlines a clear commitment to attaining net zero carbon emissions by the year 2050.
The IIGCC’s pledge targets investors and asks them to find appropriate investment strategies that create a commitment to net zero carbon emissions, and it’s already working to some effect.
What UK-Based Pension Schemes Are Involved?
At the moment, there are 36 different investors that are implementing IIGCC's framework. Combined, these investors hold and manage assets that exceed over £6 trillion, so they have considerable sway on the economy. Of the 36 investors, many are household names with significant impact on the industry.
This includes companies such as Scottish Widows, the Environment Agency Pension Fund, Royal London and Brunel Pension Partnership.
Working To Meet The Paris Agreement
The IIGCC developed the investment framework with the Paris Agreement in mind. The Paris Agreement, which was initially established in 2015, sets out a key number of goals to counteract the risks of climate change. This includes enshrining practices that result in global temperatures that don’t rise above 2 degrees Celsius, with hopes of keeping the increase to under 1.5 degrees Celsius.
Emissions are also a major concern here, with the Paris Agreement outlining aims that all emissions need to be reduced as soon as possible, with international and UK net zero status achieved by around 2050. To do this, emissions need to drop by 50% by 2030. The framework brought in by the IIGCC is a difficult one to roll out, but it's essential for the welfare and safety of millions of people across the globe. By keeping emissions down, the risk of global catastrophes due to climate change is greatly mitigated.
The framework focuses on three specific targets for decarbonisation and investment from companies such as pension scheme providers towards climate solutions. It also incorporates time-bound portfolio coverage targets for companies and assets to achieve net zero or any associated aspects of this. Finally, it includes engagement coverage thresholds to keep engagement levels as high as possible to push the pledges through.
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