Baseline date: 31 December 2019

Baseline performance: 52.5 tCO2e/£mn invested

Target year: 2030

Target(s): 13 tCO2e/£mn invested, equivalent to 75% reduction against baseline year

GHG scopes included: Scope 1 and 2 for all sectors (noting that extractive fossil fuels are excluded from the listed equities portfolio).

We have engaged with the UK public policy process regarding the reporting of scope 3 emissions, seeking to encourage regulators to address the concerns we have about data quality and availability.

We are aware of the challenges of incorporating scope 3 emissions as a part of our calculations. Volatility remains significant as the reliability of the data evolves across what is often considered to be a potentially very significant proportion of emissions.

We will also be evaluating estimation methodologies as a part of improving scope 3 indicators.

Asset classes in scope: Our initial goals relate to listed equities. These represent around half of the total Fund. We have chosen to focus on this asset class because this is the largest part of our portfolio.

Listed companies also generally publish more comprehensive data about their GHG emissions than is available for other asset classes. We are working to set targets for our other asset classes as quickly as possible.

Methodology/net zero scenarios: Assumed sectoral pathways in line with the One Earth Climate Model OECM), and taking into account updated actual emissions data up to 2021. We chose the OECM as one of the suggested scenarios set out in the NZIF target-setting guidance, as we sought to ensure our targets are closely aligned with the NZIF.

Emissions metrics: We intend that the combination of targets we have selected will together ensure a reduction in absolute emissions, without creating unintended consequences by placing attention upon output before process (e.g. creating investment constraints by implying a continual smooth reduction in absolute emissions from one reporting period to the next).

Qualitative goal: We will increase our investment in the climate solutions required to meet net zero by 2050 or sooner. We have not set a goal for the percentage of assets to be invested in climate solutions at this stage because of the lack of available data.

We expect to set a percentage goal for investment in climate solutions during 2023.

Baseline performance: We are in the process of establishing our baseline for climate solutions. Much of the relevant data relates to private assets where data consistency is at its most challenging.

Methodology: In the first instance we would look to use the EU Taxonomy framework, subject to the availability of the UK Green Finance taxonomy as the basis for identifying and determining climate solutions, as well as taking into account developments in IIGCC guidance.

Baseline date: 31 December 2021

Baseline performance: 14%

Target year: 2025, 2030, 2040

Target:

• 32% at least “aligning” by 2025,
• 55% at least “aligning” by 2030,
• 100% at least “aligned” by 2040.

Asset classes in scope: Listed equities

Data sources/methodology: CA100+ benchmark, Transition Pathway Initiative, SBTi.

A company is considered to be aligned to a net zero pathway if it meets the relevant criteria outlined in the Net Zero Investment Framework. These criteria include having a credible commitment to be net zero by 2050 or sooner, putting in place short- and medium-term targets for GHG emission reductions, and disclosing its emissions.

Target: 70%

Approach: Starting immediately, we will ensure that at least 70% of financed emissions in material sectors resulting from our listed equities exposure are either assessed as net zero, aligned with a net zero pathway, or the subject of direct or collective engagement and stewardship actions.

By 2030, we will ensure that at least 90% of financed emissions in material sectors resulting from our listed equities exposure meet these standards.