The trustee for the UK’s university pension schemes – the Universities Superannuation Scheme Ltd (USS) – has added interim climate targets for its investment portfolio over the coming decade to its existing, overarching goal to achieve net zero financed emissions by 2050.
Announcing the ramped up goals yesterday, USS said it planned to work with companies in its investment portfolio to cut the intensity of emissions they generate by 25 per cent by 2025, rising to 50 per cent by 2030, based on a measure of total CO2 per £1bn of assets under management.
Tony Burdon, chief executive of Make My Money Matter (MMMM) – the campaign group pushing for a greener pensions sector in the UK – last week pointed to USS as one of several older defined benefit (DB) schemes which had “failed to act”, with MMMM also last month writing to USS urging action.
One action aimed at supporting the interim goals outlined today is a new £500m sustainable growth mandate which USS said would be invested globally – either directly or through funds – in high growth, privately-owned businesses which develop technologies and services that aid decarbonisation efforts.
USS said the mandate would complement its existing renewable energy strategy, which includes £1.2bn deployed in wind farms and green technologies.
The sustainable growth mandate is set to be managed in-house, which the firm said would benefit the currently embattled DB scheme. Over time, the mandateid is also set to benefit the defined contribution segments of the scheme.
These interim target announements come after USS confirmed last month it would shift £5bn of AUM away from polluting companies in developed markets.
“The climate tilt and new investment mandate form part of a much bigger plan that will involve all of our investment professionals and the management teams of our portfolio companies,” said USS group chief executive Bill Galvin. “We hope that these announcements give confidence to our members and to other stakeholders of the seriousness with which we are treating decarbonisation.”
Galvin added that decarbonising was “not an easy task” noting data quality challenges he said USS shared with many schemes across the industry.
“But these targets are a statement of intent, and give us important staging posts against which to assess our progress,” he continued. “We will need to work closely with our industry peers, regulators, governments and many others. Ultimately, we all need to work together to achieve net zero.”
A version of this article originally appeared at Professional Pensions.