Net zero ambition to be considered by Hampshire Pension Fund Panel and Board

Greenhouse gas emissions from investments by the Hampshire Pension Fund could be driven down to net zero by 2050, under proposals to be considered by the Fund’s Panel and Board on 25 March

Mar 17 2022

Chairman of the Panel and Board, Councillor Mark Kemp-Gee, said: “Like our stakeholders, we consider climate change and the issues that contribute to it as a major concern. It lies at the heart of our Responsible Investment activities. That’s why we are keen to support the Paris Agreement; and will be considering the aim for net-zero greenhouse gas emissions by 2050. We will also be considering disinvesting from thermal coal.”
The carbon footprint of the companies in which the Pension Fund invests, through owning shares, has dropped by 69% since 2019 (from 146 to 46 tCO2e/£m invested - scope 1 and 2 emissions).
This reduction in carbon footprint has been achieved through measuring the carbon footprint of all the companies the fund invests in and working with investment managers to find ways to reduce the overall carbon footprint - for example, setting limits for carbon output and moving to investment strategies that are aligned to the Paris Agreement or are Climate Aware. These lower carbon investment strategies now account for 85% of the Fund’s shareholdings and equity investments.

The panel and board will consider proposals to continue this strategy, and to aim for net zero emissions by 2050. It will also consider divesting from thermal coal – the coal used to generate electricity, for which there are cleaner alternatives, and which is therefore not necessary for the transition to a low-carbon economy. 
At 31 December 2021, the value of the Pension Fund’s investments was £9.9bn; of which £323m (3.3%) was invested in renewable energy and £214m (2.2%) was invested in fossil fuel companies. Investments in thermal coal comprised 0.02% of the fund.
Councillor Kemp-Gee added: “There are significant climate change mitigation benefits that come from our engagement with fossil fuel companies, as a shareholder. Simply disinvesting from all fossil fuel companies is not a straightforward solution to tackling climate change. It does not ensure that the necessary transition to a low carbon economy is a just transition, or that the benefits of a low carbon economy transition are shared widely. Some fossil fuels are still important to support our daily lives and the transition to a low carbon economy, such as producing the steel to build wind turbines. By investing in and engaging with these companies we can, and do, support and quicken the transition to lower carbon alternatives. 
“This is not the case with thermal coal, for which suitable cleaner alternatives already exist – which is why we will be considering working with investment managers to remove investments in thermal coal from our portfolio.
“Reducing emissions from investments is not as straightforward as walking away from fossil fuel companies altogether, but our approach has already achieved a 69% reduction in our carbon footprint, and we will now be considering whether we keep going until we get to net zero by 2050.”