The Universities Superannuation Scheme (USS) has reduced its carbon emission intensity by 21% since 2019, according to its latest Taskforce for Climate-related Financial Disclosure. However, the pension fund is warning that more needs to be done to address climate change.
The USS was able to reduce its carbon emission intensity by 21% in recent years, from 89.5 to 70.7 tonnes of CO2 emissions per £1m invested, according to the report, through several activities, including:
- investing around £2bn in renewable energy and clean technologies – this includes a 50% stake in Bruc Energy, which runs solar farms in Spain;
- measuring Scope 3 emissions for corporate assets for the first time;
- reviewing and improving how it captures and measures climate data;
- developing better climate scenarios with the University of Exeter;
- encouraging Cemex – one of the world’s largest cement companies – to set more ambitious carbon-reduction targets. Cemex is now set to reach its 2030 decarbonisation target five years earlier than planned and has introduced new lower-carbon concrete products;
- investing in electric-powered aviation and carbon capture through its new £500m sustainable growth mandate.
The carbon emissions reduction since 2019 represents a 7.6% cut a year. To achieve its targets, USS needs to reduce its emissions intensity by between 4.7% and 6.1% a year, from its 2019 starting point, the report conceded.
However, the pension fund acknowledged there is more that the USS “and the wider world” can do to tackle climate change as the world “isn’t decarbonising fast enough”.
The USS added that it is keen to see more “real-world change” and therefore it wants to continue encouraging the highest emitting companies it invests in to reduce their carbon emissions.
Adding that it can’t get there on its own, the USS said it will work together with other pension funds, investors, and policy makers to “push for change”.
Innes McKeand, head of strategic equities at USS, said: “The government and regulators have a huge part to play here, not least by ensuring a predictable, transparent, and stable regulatory environment for renewable energy assets and by raising energy-efficiency standards.”
McKeand pointed out that transition to a lower-carbon world will also require further investment into renewable energy and infrastructure, which policymakers can facilitate.
He added that the USS is always looking for opportunities to increase its investments in climate solutions but “there are limited opportunities out there”.
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