Solidarity between generations: inside Ircantec’s decarbonisation agenda

Ircantec, one of the largest pension plans in France, has a longstanding history of climate-conscious investing. Having developed its responsible investment policies more than 15 years ago, it now aims to reduce its corporate portfolio-level emissions by an average 7% each year.

The €17.2bn  supplementary pension fund serves French public sector workers, with its members ranging from central government, local authority and public sector hospital workers.The fund has close links to the French state with its assets being managed by Caisse des Dépôts, the investment arm of the French government.

Having launched its first responsible investment approach in 2009, the fund has gradually ramped up its ambition, signing the Paris Pledge in 2016 and implementing a more ambitious decarbonisation policy in 2021, Nolleau explains. A key motivating factor has been a quest for intergenerational fairness. “Ircantec's commitment to climate action is rooted in its values of solidarity between generations, aiming to preserve the environment for current and future generations while supporting the energy and ecological transition,” he shares.

NZI Climate Solutions Summit | 11.09.2025 | London | find out more here

Part of the new climate policy is a commitment to apply the exclusion thresholds of the Paris-aligned benchmarks (PAB) for European indices by 2024 and to phase out fossil fuels by 2030.

In practice, this means the fund has divested from some of the world’s largest oil and gas firms. For example, it divested from TotalEnergies in 2021 following an unsuccessful engagement process as part of its commitment to CA100+, he says.

In 2022, it also divested from Anglo American, BHP, BP, ENI, Equinor, Mitsubishi Corp, OMV, RWE and Repsol. A key reason was the commitment to exclude companies launching new conventional oil and gas projects without credible transition strategies. In 2024, Ircantec sold off a further eight energy companies, divesting €48m, he shares.

That said, the fund is keen to emphasise that divestment is not the default option. It remains invested in Engie, despite the company not currently meeting minimum requirements, because Engie shows a clear commitment to change. “The institution participates in collaborative engagements when dialogues are constructive and reserves the right to divest if they are not,” he sums up.

Ultimately, Ircantec has committed to reducing the carbon footprint across its listed equity and corporate bond portfolios by 7% per annum. Divestment is only one of three levers the fund uses to meet its targets. Engagement on net zero targets and allocations to the energy transition are the other two.

Investing in the transition

Indeed, Ircantec has pledged to invest around 20% of its portfolio into transition assets. “This increased investment in the transition includes expanding the green bond portfolio and creating new funds dedicated to the energy transition,” Nolleau says.

Much of this takes place at the local level – a trend that may interest UK investors currently under pressure to increase local investment. Among other activities, Ircantec is financing local authorities, public bodies and small infrastructure projects in France focused on renewable energy and the wider transition. Most of these commitments are in listed markets (see box below), with total energy transition investment now close to 17% of overall assets.

Last year, Ircantec announced the launch of two dedicated funds, the CPR Global Equity EET Fund and another fund managed by Nomura, focusing on the energy and ecological transition through themes such as alternative energy production, energy efficiency, energy distribution, and energy management.

To manage two additional sustainable equity mandates, the fund now plans to launch a new €250m energy transition infrastructure fund, with Eiffel selected as manager. “This fund will directly invest in companies involved in the construction, ownership or operation of infrastructure for the energy and ecological transition, with the goal of aligning with the Paris Agreement,” Nolleau says.

Alignment with managers

Given Ircantec’s focus on the energy transition, climate is now a key factor in manager selection.

“The tenders launched in recent years effectively incorporate a climate dimension. For example, they require an explanation of how securities are identified, evaluated and selected based on their alignment with trajectories derived from the Paris Agreement, as well as how managers and analysts are trained on climate issues.”

However, the fund aims to avoid being too prescriptive. “Managers have significant leeway in addressing these needs: some conduct an analysis of the company’s climate positioning after the financial selection process, while others significantly reduce the investment universe by focusing on companies that provide adequate solutions for the energy and ecological transition (EET).”

All managers are required to adhere to Ircantec’s SRI charter, particularly on annual emissions reductions. They are also expected to assess negative contributors to the energy transition and regularly update their TCFD policies.

Climate considerations also weigh heavily in manager tenders, with socially responsible investment criteria accounting for 30% of the first-round selection score and 20% of the second.

Branching out into biodiversity

With climate already high on the agenda, the fund is now increasingly considering biodiversity risks and impacts across its portfolio. Earlier this year, it published a new biodiversity policy, which outlines pathways to divest from companies with adverse effects on wildlife and nature – including those exposed to GMOs, palm oil, pesticides and fur.

The fund is also developing a biodiversity footprint tool to strengthen shareholder engagement and is prioritising biodiversity in its stewardship activities.

Having joined Nature Action 100 last year, the fund now pledges to follow the recommendations of the Taskforce on Nature-related Financial Disclosures and to publish its major negative impacts.

Ircantec’s ambition stands in striking contrast to the more challenging political environment faced by some of its peers, both in the US and parts of Europe. While others retreat under pressure, Nolleau remains optimistic. “Although political changes may pose challenges for some investors, Ircantec has been an SRI investor for many years and will continue to support values aimed at combating climate change through its investments and commitments,” he predicts.

 How Ircantec is investing to tackle climate change:

• A dedicated multi-asset fund, directly invested in projects or companies aligned with these objectives, and twelve infrastructure and thematic private equity funds contributing to this goal. These include BTP Impact Local, CapEnergie 3, Demeter 4 Infra, Paris Fonds Vert, Infragreen II, Infragreen IV, Eurofideme 3, Eurofideme 4, Effithermie, Pearl Infrastructure Capital, Swen Impact Fund for Transition, and Swift 2. Seven of these funds are GreenFin-labelled. Ircantec is committed to €285m in green infrastructure, with these funds valued at €193.86m as of 31 December 2024.
• Two dedicated green bond funds, with €1,202.04m invested as of the end of 2024, representing 6.99% of assets.
• A European equity fund managed by Mirova, focusing on environmental challenges and innovation in areas such as renewable energy, clean transportation, energy efficiency, sustainable waste and water management, sustainable agriculture and green buildings. As of 31 December 2024, these investments total €245.55m, or 1.43% of reserves.
• Two global equity funds launched in 2022 and 2023 (Mirova Global Equity Fund and Janus Henderson), investing in companies contributing to climate stability by limiting greenhouse gas emissions to keep global temperature rise below 2°C. These funds represent €791.99m, or 4.60% of reserves, as of the end of 2023.
• Two equity funds launched in 2024 (CPR Global Equity EET Fund and Nomura), focused on the energy and ecological transition through themes such as alternative energy production, energy efficiency, energy distribution and energy management. As of 31 December 2024, these investments total €400.55m, or 2.33% of assets. These funds will be gradually expanded in 2025.