Brunel Pension Partnership unveils new climate change policy

Brunel Pension Partnership has launched its new Climate Change Policy 2023-30, raising its ambitions to manage climate change risk across its portfolios and in the industry at large.

The formulation of the new policy follows a one-year climate stocktake process, in which Chronos Sustainability provided independent oversight to enable deep consultation with multiple stakeholders on the content and impact of Brunel’s existing climate change policy, which had been launched in early 2020.

“Brunel wanted an independent assessment of whether their climate change policy was delivering on its purpose, and of how it could be improved,” said Rory Sullivan, chief executive officer of Chronos Sustainability.

“Our central conclusion was that Brunel has met or exceeded the objectives that it set itself in the policy, and that Brunel has made an important contribution to the wider investment market’s approach to climate change. Of course, we need to recognise how much has changed,” he added.

Critically, Sullivan noted, the expectations placed on Brunel – the demand for more new and innovative net zero investment products, the demand for more data on performance and impact, the demand for more company and public policy engagement – have also grown significantly over this time.

In its core aims, the new policy is an evolution of the 2020 policy – not a break from it. Brunel remains committed to targeting 1.5°C both across its portfolios and in the broader industry. It also retains its commitment to the same five thematic priority areas.

“For our partnership to retain its ambition, leadership and innovation on climate change, we need to adapt to an area that is changing rapidly,” said Laura Chappell, CEO at Brunel. “This policy moves us forward to the next stage. Crucially, it also embeds the ‘climate stocktake’ approach for the long term.”

The new policy commits Brunel to conducting a further climate stocktake in 2025, in order to fully review the effectiveness of the new policy.

The policy involves significant changes from the 2020 version, in both priorities and approaches.

The full integration of the Net Zero Investment Framework, embedding the recommended objectives and targets, for example portfolio alignment, stewardship, manager and general partner engagement as well a commitment to continue our decarbonisation journey consistent with Paris.

Likewise, improvements in responsible investing data across less mainstream asset classes have led the investment pool to evolve how it targets its key themes, such as holding asset managers to greater reporting requirements through the International Sustainability Standards Board, Task Force on Climate-related Financial Disclosures, the Sustainable Finance Disclosure Regulation, Sustainability Disclosure Requirements, and the Solvency II Tripartite Template.

The policy also recognises climate change’s links to other urgent issues, such as biodiversity, diversity, equity and inclusion, human rights and social issues (especially just transition), and circular economy and supply chain management.

All these areas are already priority responsible investing themes at Brunel and each therefore receives specific coverage in its annual RI & Stewardship Outcomes Report.

Impact

Brunel’s new policy will not only affect how it designs and evolves its portfolios. It will also impact how the investment pool recruits and monitors the managers it appoints to run mandates on those portfolios.

Finally, it will also impact how it engages more broadly beyond its partnership, whether coordinating with other asset owners on responsible investing issues, or pressuring companies to improve their practices.

“Few areas of our industry have evolved as rapidly as climate change in recent years, so the onus is on asset owners and managers to be nimble in response,” said Faith Ward, chief responsible investment officer at Brunel.

“Evolving is not just a question of managing changing risks; just as importantly, it is about identifying and using opportunities to build the new economy – often in private markets,”

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