The Asset Owner Statement on ClimateStewardship - led by the People’s Pension, Brunel Pension Partnership andScottish Widows and others - sets out expectations for the sector on tacklingthe climate crisis
More than 25 UK investors and pensionproviders collectively representing £1.2tr ($1.5tr) of managed assets havesigned up a newly launched initiative this week which sets out key expectationsfor the sector in helping to tackle the climate crisis.
The Asset Owner Statement on Climate Stewardship releasedon Monday, which has been signed by the likes of Aegon UK, the People'sPension, the Brunel Pension Partnership and Scottish Widows, states that itaims to "empower" investors to deliver on their asset owner climateobjectives as part of their mandates.
Expectations set out in the statement includeensuring industry and public policy engagement is core to the climatestewardship proposition across asset classes, prioritising collaborativeinitiatives to achieve greater impact and embed efficiencies in engagementactivities, and ensuring prioritisation frameworks for company engagement are"rooted in a robust theory of change that delivers maximum impact".
Other core principles signatories have signedup to include ensuring a systemic approach to voting and appropriatelyresourcing the stewardship function.
The statement warns that climate changepresents a "systemic and material risk to economies and financialmarkets", and that its pension funds have "independently set clearcommitments to address climate change and are making progress by working acrossthe investment ecosystem, while keeping with all regulatory and legalrequirements".
However, it said research had shown evidenceof a "divergence between asset owners' expectations and asset managers'climate stewardship activity", as it called for asset owners andasset managers to work together more closely to build a more "efficientand competitive industry, ultimately benefitting beneficiaries".
It comes amid fresh research by the Make MyMoney Matter campaign this week, which accused the UK's biggest pension fundsof "persistent failure" on addressing the climate crisis,highlighting the sector's continually high exposure to carbon intensive andrisky activities such as fossil fuel production and deforestation.
However, the Asset Owner Statement on ClimateStewardship states its aim to build on industry guidance, to "promote abetter understanding of good practices for climate stewardship and to enable adialogue on how asset managers can more effectively represent theirbeneficiaries' long-term interests".
People's Partnership head of responsibleinvestment Leanne Clements said that "in these challenging times it is nowmore important than ever as an asset owner community to send a strongcollective principle-based signal to our asset managers as to what we expect ofthem".
"Time is running out in the lead of up to2030, asset owners and asset managers must work together in partnership todrive meaningful change: not only in the companies in which we invest, but inthe underlying economic, social and environmental systems upon which ourmembers depend," she said.
The Brunel Pension Partnership's head ofstewardship Vaishnavi Ravishankar said the statement responded "directlyto feedback from our managers to hear from asset owners jointly on climatestewardship expectations and represents an important signal to themarket".
"The statement signposts what we, asrepresentatives of our beneficiaries' long-term interests, consider importantfor fund managers to demonstrate," she said. "We expect this to be aliving document that will evolve through ongoing dialogues with our managersbut in the first instance, codifies what we consider as best practice to informmanager selection and monitoring."
Shipra Gupta, investment stewardship lead atScottish Widows, added: "Systemic risks and opportunities, like climatechange, require systemic and systematic interventions across the investmentvalue chain.
"This statement sets out a clearprinciples-based framework of asset owner expectations of their asset managersencompassing the importance of influencing and shaping policy and regulation,of working in collaboration with stakeholders, of using their shareholderrights and responsibilities more effectively, and all of it being embedded inappropriate sectoral strategies and relevant technical expertise."
Full list of signatories to the statement asof 10 February 2025: Aegon UK, Australian Ethical Investment, Border toCoast Pensions Partnership, Brunel Pension Partnership, Church of EnglandPensions Board, Cornwall Pension Fund, Environment Agency Pension Fund, GreaterManchester Pension Fund, LGPS Central, London Pensions Fund Authority, LothianPension Fund, Merseyside Pension Fund, Nest, North East Scotland Pension Fund,Northern Ireland Local Government Officers' Superannuation Committee, OxfordshirePension Fund, Pension Protection Fund, Pensionskasse Basel-Stadt, PhoenixGroup, School Sisters of Notre Dame Collective Investment Fund, ScottishWidows, Shell Contributory Pension Fund, Sisters of Charity of St. VincentdePaul of New York, SVVK-ASIR, The People's Pension, and West Midlands PensionFund.