Investments: Climate change

The Carbon footprint analysis builds upon the first report issued in 2021 and whilst a similar approach has been taken this year the methodology has been refined to reflect increased understanding and progress across the investment industry in this area. 

The analysis shows the Fund's carbon footprint as at March 2024 and compares this to previous years and also goes back to the agreed baseline date of March 2019. 

Further analysis was also undertaken to take the baseline back to 2010 to give a longer term perspective and to see how the Fund has decarbonised over a longer period.

The carbon footprint work undertaken shows that the Fund continues to make excellent progress in reducing Weighted Average Carbon Intensity (WACI) with a 42% reduction over the five year period, from 2019 to 2024. This is the Fund's primary risk metric. This represents an improvement of 3% from 2024. The Fund has achieved its first interim carbon emissions reduction target of a 30-35% reduction by 2025, two years ahead of schedule. 

The Fund's primary climate metric WACI (Revenue), is considered to be one of the more robust data measures but even with this metric the market coverage of the data is only 68%.  The Fund level data is expected to be lower as the Fund often invests in off benchmark assets. Whilst this level of coverage is low it is a material improvement on the position from 2019 of 34%.

All of the carbon metrics shown in the carbon footprint report are based upon Scope 1 and 2 emissions. 

For the first time in 2023 the analysis has sufficient data to calculate a Scope 3 Emissions metric. This shows the Fund is around 22% below the benchmark. However, it should be noted that data coverage is only 54% which is why the Fund does not place significant reliance on these figures.

In addition, this year's report now includes the Thermal Coal metric which shows the Fund is around 35% below the benchmark.