Phoenix Group, the UK’s largest long-term savings and retirement business, has unveiled a new "Climate Aware" index series in partnership with FTSE Russell.
This initiative is a significant step in Phoenix Group's decarbonisation strategy for equity investments, aligned with its Net Zero Transition Plan announced last year. Phoenix, which has £283bn in assets under administration has pledged last year to half the carbon footprint of its investment portfolio by 2030.
The newly launched FTSE Phoenix Climate Aware index series will initially cover national and regional markets and will expand over time. These benchmarks aim to increase the resilience of customer portfolios to climate change-related risks by reducing exposure to companies that lack robust climate transition plans.
Key features of the indices include adherence to Phoenix's decarbonisation principles and the use of forward-looking data. Companies not aligned with these principles are excluded, ensuring that climate risk management is a core focus.
Sindhu Krishna, head of Sustainable Investment at Phoenix Group, emphasised the importance of insurers managing transition risks proactively: "“At Phoenix, we believe that transition risk will be a key climate risk factor over the coming decades as governments, corporates and customers respond to the climate emergency. Without management of those risks, our policyholders are likely to be exposed to a higher probability of sub-optimal investment performance" she warned.
Solange Le Jeune, head of Equity Sustainable Investment Product at FTSE Russell, expressed enthusiasm for the partnership, noting that these indices enable the mainstreaming of decarbonisation strategies with minimal deviation from parent benchmarks.
The phased introduction of these benchmarks will begin with US equities and will subsequently be expanded across the wider equity portfolio. Phoenix did not disclose details on the companies which will be underweight as part of the index.
