Church of England Pensions Board Adam C.T. Matthews Director, - - PowerPoint PPT Presentation

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Church of England Pensions Board Adam C.T. Matthews Director, - - PowerPoint PPT Presentation

Mar 12, 2023 787 likes •1.02k views

Church of England Pensions Board Adam C.T. Matthews Director, Ethics and Engagement Fund Outline 2.8 billion AUM and growing 38,000 current and future beneficiaries (clergy and church workers) Long term institutional investor

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Church of England Pensions Board

Adam C.T. Matthews Director, Ethics and Engagement

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1 yr (to end of 2019) 15.5% (net of fees) 3 yr 8.2% p.a. 5 yr 8.6% p.a. 10 yr 9.2% p.a. 15 yr 8.0% p.a.

Fund Outline ▪£2.8 billion AUM and growing ▪38,000 current and future beneficiaries (clergy and church workers) ▪Long term institutional investor invested globally and across multiple asset classes ▪Embed ethical policies into our investment approach ▪Climate Change viewed as both a financial and ethical risk

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Serving Our Beneficiaries’ Interests: Our Approach to Climate Change

Public Policy Engagement Understanding the Transition Commitment to Act Taking Action & Manager Monitoring Portfolio Alignment & Testing Robust Stewardship & Engagement

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Understanding the Transition Commitment to Act Taking Action & Manager Monitoring Portfolio Alignment & Testing

Asset Owner Tool 2017 Created & Co-Chair (on behalf of National Investing Bodies) with the Environment Agency Pension Fund the Transition Pathway Initiative (TPI) to provide an independent academic asset

  • wner tool – expanding to sovereign &

corporate bonds Supported by 64 funds with $19 trillion AUM

Robust Stewardship & Engagement

Understanding the Transition

Commitment to Act Public Policy Engagement

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Robust Engagement & Stewardship

Public Policy Engagement Commitment to Act Taking Action & Manager Monitoring Robust Stewardship & Engagement

TPI Indicator Framework underpins $42 trillion AUM supported CA100+ Model Engagement Framework based on Shell CA100+ engagement Co-Chair with UBS of Mining & Steel Engagement Group Developing Value Chain Engagement/Ecosystem with Swedish AP Funds TPI integrated into Proxy voting & AGM Resolutions

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Case Study: Net Zero Pathway

35% Pivoting to Net Zero Committed Customers

65% Net Carbon Footprint Reduction

Robust Engagement & Stewardship

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Taking Action & Manager Monitoring

Public Policy Engagement Commitment to Act Taking Action & Manager Monitoring Robust Stewardship & Engagement

Passive Index: Development of FTSE-TPI Climate Transition Index £600m New Manager Monitoring Framework: embedding climate criteria & TPI analysis Impact Investment: £125m impact investment commitment Infrastructure (low carbon): £85m Private Equity Mandate: Exploring low carbon

  • pportunities with new mandate
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Public Policy Engagement

Public Policy Engagement Commitment to Act Taking Action & Manager Monitoring Robust Stewardship & Engagement

Supporting Public Policy Interventions (IIGCC/PRI) and leadership of funds like Brunel New Sovereign Bond Approach through TPI Corporate Climate Lobbying Programme with AP7, BNP, ASI & New Global Lobbying Standard

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Serving Our Beneficiaries’ Interests: Our Approach to Climate Change

Public Policy Engagement Understanding the Transition Commitment to Act Taking Action & Manager Monitoring Portfolio Alignment & Testing Robust Stewardship & Engagement

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Better decisions, Better outcomes

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Better decisions, Better outcomes

  • 1. PLANNING

AND DISCUSSION JOINT, ACTIONABLE POLICY SET EXPECTATIONS, IMPROVE UNDERSTANDING, E,S or G?

WHAT? WHY? OUTPUT

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Better decisions, Better outcomes

  • 1. PLANNING

AND DISCUSSION JOINT, ACTIONABLE POLICY SET EXPECTATIONS, IMPROVE UNDERSTANDING, E,S or G?

WHAT? WHY? OUTPUT

  • 2. ANALYSIS /

MONITORING SET PRIORITIES AGREE PLAN UNDERSTAND STARTING POINT AND PACE OF CHANGE

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Better decisions, Better outcomes

  • 1. PLANNING

AND DISCUSSION JOINT, ACTIONABLE POLICY SET EXPECTATIONS, IMPROVE UNDERSTANDING, E,S or G?

WHAT? WHY? OUTPUT

  • 2. ANALYSIS /

MONITORING SET PRIORITIES AGREE PLAN UNDERSTAND STARTING POINT AND PACE OF CHANGE

  • 3. IMPLEMENT

PROGRESS TO TARGETS MAKE PORTFOLIO CONSISTENT WITH POLICY

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Bespoke target setting Engagement with managers Impact investing

Large scheme / engaged sponsor

Better decisions, Better outcomes

  • 1. PLANNING

AND DISCUSSION JOINT, ACTIONABLE POLICY SET EXPECTATIONS, IMPROVE UNDERSTANDING, E,S or G?

WHAT? WHY? OUTPUT

  • 2. ANALYSIS /

MONITORING SET PRIORITIES AGREE PLAN UNDERSTAND STARTING POINT AND PACE OF CHANGE

  • 3. IMPLEMENT

PROGRESS TO TARGETS MAKE PORTFOLIO CONSISTENT WITH POLICY

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Bespoke target setting Engagement with managers Impact investing Engagement with advisors Joint action Utilise pooled funds / passive

  • ptions

Large scheme / engaged sponsor Small scheme

Better decisions, Better outcomes

  • 1. PLANNING

AND DISCUSSION JOINT, ACTIONABLE POLICY SET EXPECTATIONS, IMPROVE UNDERSTANDING, E,S or G?

WHAT? WHY? OUTPUT

  • 2. ANALYSIS /

MONITORING SET PRIORITIES AGREE PLAN UNDERSTAND STARTING POINT AND PACE OF CHANGE

  • 3. IMPLEMENT

PROGRESS TO TARGETS MAKE PORTFOLIO CONSISTENT WITH POLICY

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Clear policy Actionable plan Monitor exposure Bespoke target setting Engagement with managers Impact investing Engagement with advisors Joint action Utilise pooled funds / passive

  • ptions

Large scheme / engaged sponsor Small scheme

Better decisions, Better outcomes

  • 1. PLANNING

AND DISCUSSION JOINT, ACTIONABLE POLICY SET EXPECTATIONS, IMPROVE UNDERSTANDING, E,S or G?

WHAT? WHY? OUTPUT

  • 2. ANALYSIS /

MONITORING SET PRIORITIES AGREE PLAN UNDERSTAND STARTING POINT AND PACE OF CHANGE

  • 3. IMPLEMENT

PROGRESS TO TARGETS MAKE PORTFOLIO CONSISTENT WITH POLICY

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1

1 September 2020 Aon Solutions UK Limited is authorised and regulated by the Financial Conduct Authority.

Discover

Raise awareness Define beliefs

Develop

Agree objectives Agree policies

Deliver

Assess alignment and risks Engage and invest

Review

Stakeholder engagement Report and review

The Responsible Investment Roadmap

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2

1 September 2020 Aon Solutions UK Limited is authorised and regulated by the Financial Conduct Authority.

Can capability keep up with the ambition?

reduction in carbon emissions needed

  • ver the next decade

to limit the rise in global temperatures to no more than 1.5 degrees Celsius above pre-industrial levels by the end of the century

  • f trustees believe that

climate change will impact on returns within a timeframe they are concerned about

  • f trustees believe they

have a duty and an ability to help tackle climate change

50% 73% 47%

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3

1 September 2020 Aon Solutions UK Limited is authorised and regulated by the Financial Conduct Authority.

How are pension schemes addressing this?

Objectives and policies Assess alignment and risks Engage and invest Beliefs

Sponsor initiated ESG “best-in-class” Replace equity managers Scheme A

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4

1 September 2020 Aon Solutions UK Limited is authorised and regulated by the Financial Conduct Authority.

How are pension schemes addressing this?

Objectives and policies Assess alignment and risks Engage and invest Beliefs

Sponsor initiated ESG “best-in-class” Trustee initiated Portfolio deep dive Replace equity managers Invest for impact = returns Do no harm Full alignment Scheme A Scheme B