Baseline date: 30 June 2020

Baseline performance:

• Sec A: 78tC02e/£mn invested
• Sec B: 81tC02e/£mn invested

Target year(s): 2030, 2050

Target(s): Target by 2030: Reduction of 50% CO2e/£mn invested

Target by 2050 or sooner: Net Zero

GHG scopes included: Target setting currently only includes scope 1 and 2, with plans to include scope 3 over time, in line with the Net Zero Investment Framework recommendations.

Asset classes in scope: Listed Equities and Corporate Fixed Income.

Currently working on incorporating Real Estate with further details to follow.

Methodology/ net zero scenarios: NGUKPS has used the Paris Aligned Investment Initiative Net Zero Investment Framework (NZIF) to set the target and assessed the alignment to a 1.5°C pathway. In particular, NGUKPS is adopting a 50% reduction in emissions intensity by 2030 pathway to align with the IPCC’s modelled global pathways in which CO2 emissions are reduced to Net Zero globally around 2050, with no or limited overshoot.

Emissions metrics: The finance emission target used above is based on absolute carbon emissions scaled by £mn invested. A reduction in this measure over time (assuming the amount invested does not fluctuate) does directly translate to a reduction in absolute emissions.

Qualitative goal: NGUKPS is a mature scheme well into their de-risking journey. NGUKPS will endeavour to increase investments in climate solutions, where possible noting the constraints around its maturity.

Methodology: NGUKPS will continue to monitor developments in data and the evidence base in defining allocations to climate solutions as we increase investments in the space if appropriate to do so.

The scheme is currently assessing the possibility to evaluate the percentage of assets in the portfolio that are aligned or eligible to meet the EU Taxonomy as a reasonable proxy for the percentage of the portfolio currently invested in climate change opportunities.

Baseline date: 20 June 2020

Baseline performance: NGUKPS has assessed the proportion of assets meeting at least ‘aligning’ criteria. Based on this assessment the proportion of material sector assets meeting at least aligning criteria is 32% and 29% of Section A and Section B respectively. Having said that, data coverage remains poor with approximately 50% of the portfolio still needing to be classified. We therefore expect the baseline to fluctuate considerably as coverage improves.

Target date: 2025 and 2040

Target:

Target by 2025: Proportion of assets in material sectors expected to meet at least “aligning” criteria as follows:

• Section A: Of our investments in ‘material’ sectors, 20% will be either Type 1 (already at net zero GHG emissions), Type 2 (aligned to net zero) or Type 3 (aligning to net zero).
• Section B: Of our investments in ‘material’ sectors, 20% will be either Type 1 (already at net zero GHG emissions), Type 2 (aligned to net zero) or Type 3 (aligning to net zero).

We note that the target set above is below the current baseline. This is due to the expectation that the baseline will fluctuate as coverage improves. That said, NGUKPS has an ambition to increase these targets over time as confidence around the data improves.

Target by 2040: Of our investments in ‘material’ sectors, 100% will be either Type 1 (already at net zero GHG emissions), Type 2 (aligned to net zero)

Asset classes in scope: Listed Equities and Corporate Fixed Income.

Data sources: CA100+ benchmark, Transition Pathway Initiative, SBTi and MSCI

Target: In the near term NGUKPS has the ambition for 70% of financed emissions in material sectors to either meet the net zero “aligned” criteria or be subject to direct or collective engagement & stewardship actions.

By 2030, the scheme has the ambition for 90% of financed emissions in material sectors to either meet the net zero “aligned” criteria or be subject to direct or collective engagement & stewardship actions.