BORDER TO COAST FURTHER STRENGTHENS RESPONSIBLE INVESTMENT POLICIES TO SUPPORT CLIMATE AND ESG RISK MANAGEMENT
Posted on February 29th, 2024
- New commitment generally to vote in favour of shareholder resolutions that are aligned with the Paris climate agreement*, taking a ‘comply or explain’ approach.
- Extend exclusions to cover thermal coal power generation, reflecting Just Transition principles by differentiating between developed and emerging markets.
- Extend voting policy on Board accountability to cover decarbonisation strategy as well as net zero targets.
Border to Coast Pensions Partnership, one of the largest UK pensions pools, has strengthened its Responsible Investment (RI) policies to develop and further embed ESG (Environment, Social and Governance) into investment management.
The update of all Responsible Investment policies, including voting and climate change policies, is part of Border to Coast’s annual review. This is carried out in conjunction with its 11 Partner Funds which represent over 1 million members, 2,700 employers and have c.£58bn in investments.
Jane Firth, Head of Responsible Investment at Border to Coast, said: “Our strengthened approach to voting and exclusion thresholds demonstrates our commitment to Net Zero.
“As long-term investors, we believe it’s critical that the firms we invest in on behalf of our Partner Funds are appropriately managing the risks of climate change and are adopting robust climate change targets and policies.
“We believe that voting is essential to managing climate risk and an important means of influencing company targets and policies. However, not every climate resolution will be supportable, so it is important to explain our rationale on those occasions we vote against.
“Our new exclusion policy covering coal power generation reflects Border to Coast’s support for a Just Transition, recognising that countries have differing transition timelines and economic dependencies on coal.”
The strengthened RI policy includes:
Border to Coast will generally vote in favour of shareholder resolutions that are aligned with the objectives of the Paris climate agreement, taking a ‘comply or explain’ approach, publicly disclosing our rationale if we vote against.
- Border to Coast will not invest in organisations where: thermal coal power generation is more than 50% of revenue of companies listed in developed markets, and 70% for companies in emerging markets; thermal coal and oil sand production represent more than 25% of revenues.
- Border to Coast will vote against the Chair of the Board where a company covered by Climate Action 100+ fails indicators of the Net Zero Benchmark covering emission reduction targets and from 2024 decarbonisation strategy.
- Where management put forward a ‘Say on Climate’ resolution, we will vote against if, following our analysis, we believe it is not aligned with the Paris climate agreement.
- We will vote against the Chair of UK nomination committees if the board is composed of less than 40% female directors, and for FTSE 250 companies if the Board does not have at least one person from an ethnic minority background, unless plans to address have been disclosed.
- An exclusion for controversial weapons has been broadened to cover landmines, biological and chemical weapons. This covers international treaties and conventions that the UK has either ratified or to which it is a state party.
*The overarching goal of the Paris Agreement, adopted at COP21 in 2015, is to hold the increase in global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels.
“As long-term investors, we believe it’s critical that the firms we invest in on behalf of our Partner Funds are appropriately managing the risks of climate change and are adopting robust climate change targets and policies.”
