The £35bn pool, which invests the pension assets of 10 partner funds said it has reduced its overall carbon intensity by 35% from its 2019 baseline but also revealed that the pace of decarbonisation has been mixed, depending on the sector.
Some of the steepest reductions in carbon emissions were reported in the pool’s passive strategies, with the Brunel Paris Aligned World Developed Equity index reporting a 43% reduction of carbon intensity compared to its 2019 baseline. Progress has also been steep for its Brunel Global High Alpha fund, a global equity strategy which succeeded in cutting its carbon footprint by 50% since 2019.
But other strategies, including the pool’s sustainable equity strategy and small cap strategy reported an increase in carbon intensity throughout that period. Brunel said that the increase in carbon intensity for its sustainable equity portfolio was intentional.
Having added a new set of managers in 2021, the fund focusses on companies leading the energy transition and therefore by definition tends to have a higher carbon footprint than a regular equity strategy. The £3.2bn fund has a relatively higher exposure to sectors such as utilities and basic materials and has outperformed the Morningstar Global Large Cap over the past five years.
“We take a nuanced approach to RI and stewardship – not simply criticising bad behaviour by companies and investors but seeking to help transform it. We take steps to avoid investing in companies that do not take social and environmental risks seriously. We firmly believe that it is better to address the underlying problems, than avoid them. It is not enough for asset owners and managers to simply try to change other companies” explained CEO Laura Chappell.
Brunel has taken a prominent stance on shareholder engagement around climate change with its chief responsible investment officer Faith Ward (pictured) acting as chair of the Institutional Investor Group on Climate Chang and the UK Asset Owner Roundtable.
She has recently spoken out about the discrepancy in shareholder engagement between asset owners and asset managers, warning that for some asset managers, short-term interests overtook long-term considerations on climate change. She called for a meeting between asset owners and managers to enhance the dialogue between both sides.
