Climate action from transport firms 'not fast enough', say pension funds

This came in response to a research report published today (4 December) by the Transition Pathway Initiative (TPI), in which it analysed the automotive, aviation and shipping sectors' climate management quality and carbon performance.

Of 57 firms, it found that less than a fifth had emission reduction plans to keep global warming to two degrees or lower, in line with the Paris agreement climate pledges made in 2015.  

Speaking on behalf of the Environment Agency Pension fund, part of the Brunel Pension Partnership, TPI co-chair Faith Ward said: "From freight ships to Ferraris, it's encouraging that most major transport companies have set a course for a low carbon future. But they are not going fast enough.

"The message for the world's airline, automotive and shipping giants from both the UN climate talks and today's TPI research is very clear: As the low carbon transition ratchets up in 2020 the transport sector risks being left behind."

She concluded that transport firms must "accelerate their climate action to meet the demands of climate-conscious investors".

The same study did find that 35% of transport companies have emission reduction plans consistent with Paris agreement pledges.

However, TPI co-chair and Church of England Pensions Board director of ethics and engagement Adam Matthews argued that investors will be "troubled" by climate progress by the sector, and its reliance on net emissions targets.

He said: "The issue with these targets is that they obscure whether emission reductions plans will depend largely on offsetting rather than a shift to lower-carbon aviation operations. A dependence on offsetting is not a credible climate strategy given the urgency of making deep cuts in greenhouse gas emissions across all sectors of the economy."

It is not just the transport industry which has sparked concern. This report follows a separate study by the TPI on energy companies' efforts to tackle climate change, finding just 28% of the top firms were aligned with national government pledges.

The news follows rules which came into force at the start of October requiring pension schemes to reveal how their investment strategies consider financially-material ESG risks, including climate change. TPR updated its DC investment guidance in June to reflect the changes.

A recent survey by Octopus Renewables also revealed global institutional investors plan to divest 15.6% of their portfolios from fossil fuels over the next ten years.

Meanwhile, the Pensions Climate Risk Industry Group is drafting trustee guidance on climate-related issues and how they can address the risks as part of their governance processes.

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• Topics
• Investment
• Environment Agency
• Brunel Pension Partnership
• Adam Matthews
• Church of England Pensions Board
• Pensions Climate Risk Industry Group