Phoenix Group CEO Andy Briggs has held himself accountable for the company’s carbon intensity reduction targets for 2025 and 2030 and emphasised that its fiduciary duties will always be to provide strong investment returns.
Speaking at a live broadcast held by Phoenix yesterday, Briggs emphasised the reality of carbon emission targets set so far in the future and has taken responsibility for delivering results, “I do recognise that it might seem very easy for a CEO to set a target that is so far in future that they personally would not have to deliver it. However, I will be personally accountable for 2025 and 2030 carbon intensity reduction targets for our investment portfolio that we recently announced, which are an important part of our journey to net-zero.”
Global carbon emissions must be cut in half over the next decade to achieve net-zero emissions by 2050 and keep the global temperature rising above 1.5 degrees Celsius, as stipulated in the Paris Agreement. As part of its 2050 net-zero carbon ambitions, Phoenix recently set interim carbon emission reduction targets for 2025 and 2030, equal to the annual emissions of one-quarter of UK homes. The new interim carbon targets of 25% and 50% for 2025 and 2030, respectively, will apply to the £250bn Phoenix-controlled investments, including £160bn in pension investments.
Phoenix’s four key areas for achieving net-zero targets, according to Briggs, are setting robust and ambitious net-zero targets that are aligned with science, using investments to finance transition and fund the innovative climate solutions required, engaging customers, and actively helping to inform the debate, shape policy, and drive action.
“We are supporting the transition to a low-carbon economy by integrating ESG into our end-to-end investment process,” Briggs added. The strategy includes redesigning its portfolios by developing and implementing a decarbonisation strategy to reduce emissions; engaging in active stewardship; managing climate risk, and committing to accurate and transparent reporting of carbon emissions.
Customers’ primary concern remains to be financial return, and green investments must ensure this. Briggs said: “It’s important for me to emphasise that our fiduciary duty is and always will be to ensure that we provide strong investment returns to our customers by investing in companies that have been proactive in adapting to the changing market dynamics and regulatory environment that is evolving to avoid catastrophic climate change. We aim to protect customers from exposure and excessive risk and, in part, long-term returns. Therefore a well structured net-zero aligned portfolio will help maximise returns in all scenarios.”
But Invesco fund manager Clive Emery said that a new approach to fiduciary duties is required. “At present, the fiduciary duty is to deliver financial return. If we are moving to a world where, because of the difficulty in regulating the global industries to align to net-zero that one of the mechanisms we’re going to do is use the capital markets, asset owners, banks and asset manager to enforce net-zero, there is a real issue because that is our influence onto authorities, but one of the problems we see is that fiduciary duty is financial. There probably needs to be a new approach to fiduciary duty. What benefits should your pension give you, and should there be an additional fiduciary duty for net-zero? My view is that there should be.”
Meanwhile, Prime Minister’s spokesperson for COP26 Allegra Stratton outlined some of the government’s goals and said: “COP26 will be the climate summit where we want real-world changes. We want movement on coal, cars, cash and trees to limit climate change to 1.5 degrees. We want rich nations to phase coal out by 2030 and less well off ones to do it by 2040. We want major car markets and manufacturers to end the new sale of petrol and diesel vehicles by 2035.”
The government recently highlighted the required steps for the UK to take the lead in sustainable and “green” investment. The government will impose new sustainability disclosure requirements, which should help investors compare the green credentials of different financial products and make it easier for pension funds, investors, and other financial services companies to analyse and compare individual companies’ green credentials.