SFE Insight | Helping our customers save for the long-term sustainably

Sindhu Krishna is Head of Responsible Investments at Phoenix Group

One of the most defining global issues of today is climate change. With weather patterns shifting, sea levels rising, carbon dioxide concentrations increasing and continual threats to food production, every industry has a role to play to create a tide of change.

As the UK’s largest long-term savings and retirement business, Phoenix Group serves circa.14 million policyholders which is both a huge privilege and a great responsibility. It is our duty to ensure that these savings are a force for good and do not harm our planet or our environment.

The onus on us all to live sustainably has never been greater. It is driving everyday actions from making sure we recycle, to carrying reusable cups and bottles. With sea levels and temperatures rising, every industry has a role to play.

This is especially true for the long term savings industry, as where people’s money is invested can, and will, have a huge impact on the world our children and grandchildren inherit.

At the end of last year we launched a new Multi Asset ESG default DC fund solution for Standard Life’s workplace pension clients which screen out companies with sustainability risks. This has been well received and as a business we’re committed to furthering the evolution of the way in which pension scheme investment takes into account climate change.

Helping to tackle climate change is absolutely fundamental to Phoenix’s purpose which is to help people secure a life of possibilities. We are integrating ESG considerations into everything we do as a business, with Climate Change sitting at the heart of ‘E’, ‘S’ and ‘G’ pillars.

Our net-zero commitments

Addressing climate change is vital to society and to Phoenix, and we would encourage all businesses to fully support the goals of the Paris Agreement., In December 2020 we announced our commitment to becoming net-zero in our operations by 2025 and in our investment portfolio by 2050. At the time of becoming a signatory in December 2020, Phoenix was the largest ‘Asset Owner’ signatory in the UK and Ireland to the UN Principles of Responsible Investment.

To support this journey, in 2021 Phoenix will focus on measuring the emission intensity within its portfolio, enabling it to set incremental targets and a carbon reduction pathway across assets where it exercises control and influence. We will begin with equities and liquid credit, and will establish a framework to monitor and report on progress.

This year we have also set a target of reducing Scope 1 and Scope 2 greenhouse gas from occupied premises by 20% per FTE intensity in 2021. 

In making these commitments we have become a Business Ambition for 1.5 degrees signatory. We’re also complying with the Task Force on Climate-related Financial Disclosures which aim to increase reporting of climate-related financial information as a key enabler to reach these targets. We also recently became a signatory to Climate Action 100+.

We know these actions are important to many of our customers, clients and their advisers. We are taking a thorough approach, understanding, learning, setting targets and making commitments. We are on a journey that is crucial to any business that is purpose led and aims to be sustainable.

Sponsorship of Pensions Policy Institute report on ESG and Climate Change

That’s why we sponsored the Pensions Policy Institute (PPI) to investigate how pension scheme investment should take into account climate change in a report called, ‘Engaging with ESG: Climate Change’. The report takes into account climate change within the current regulatory landscape, and explores the proposals for more effective support to encourage evolution and improved risk mitigation. The report is the second output from the Engaging with ESG series from the PPI, with the third and final report in the series being published in April.

What the report has found is that when pension schemes design their approach to ESG, half of schemes are finding either too much information or conflicting information to be a major challenge. The report recommends that joined-up goals, strategies and data sources across government and industry will improve scheme engagement with climate change. This includes establishing a consensus on goals across all stakeholders to ensure climate change considerations are integrated across the investment landscape by a certain date and agreed steps on how to get there.

There are no easy or quick fixes

What is clear from this report is that there is no easy or quick fix to the issues we face. Both industry and government must work hand in hand to establish a consolidated strategy, with simpler, centralised data sources. This lack of a harmonised reporting process is proving to be a substantial barrier to improving the effectiveness of risk mitigation in schemes’ investment strategies.

Climate change is one of the biggest global issues of today and in the run up to COP-26, it is essential that as an industry, investing trillions on behalf of our customers, we work together with Government and wider stakeholders to drive positive change.

Published 7 April 2021