Border to Coast Pensions Partnership Limited
Border to Coast Pensions Partnership is one of the largest pension pools in the UK. Border to Coast joined the Net Zero Asset Managers Initiative in November 2021 andd made its Iniitial Target Disclosure in November 2022.
60% of total AUM
initially committed to be managed in line with net zero
USD $30.4 billion
currently committed to be managed in line with net zero
Information on interim target(s) covering the proportion of assets to be managed in line with net zero
Portfolio coverage baseline
We have used the baseline for assessing portfolio alignment as 31st March 2022 rather than 31st March 2019. This is due to not all the tools being available for the earlier date. While our portfolio companies’ emissions provide insight into our current position, considering the percentage of our portfolios invested in companies which are aligned to Net Zero offers a forward-looking view of the emission projections of our portfolio. This metric helps us understand which companies are aligned or aligning to a Net Zero pathway, which allows us to understand their likely future emission reductions. At 31st March 2022 48% of our financed emissions in the asset classes that are in scope for this implementation plan are emitted by companies that are considered to be aligned or aligning to Net Zero. We have based our assessment on the six criteria of a Net Zero Transition Plan within IIGCC Net-Zero Investment Framework using data provided by CA100+, the Transition Pathway Initiative (TPI), the Science Based Targets initiative (SBTi) and MSCI. We have set a series of interim targets, with the aim of reaching 100% Net Zero alignment by 2040. For a company to be Net Zero aligned, it must meet one of the following three definitions, which we determine using the Paris Aligned Investment Initiative criteria: 1) achieving Net Zero, 2) aligned to a Net Zero pathway, 3) aligning towards a Net Zero pathway.
Portfolio decarbonisation reference baseline
213.8 (tCO2e/USDm invested)
Engagement threshold baseline
Based on analysis conducted as at 31/03/22, 48% of financed emissions are considered to be either aligned (< 1%) or aligning to Net Zero (47%). We have based these classifications on the six criteria of a Net Zero Transition Plan in the NZIF Implementation Guide using data points from the Climate Action 100+ Net Zero Benchmark indicators, TPI, SBTi and MSCI.
Based on analysis conducted as at 31/03/22, 73% of financed emissions are considered to be under engagement. Of that 73%, < 1% is considered to be aligned to Net Zero and 47% is considered to be aligning to Net Zero. The remaining 25% is classified as committed to Net Zero or Not Aligned. Alignment methodology is shown under Q31. For engagement coverage, we have taken a conservative approach and included companies under engagement by Climate Action 100+ and by our voting and engagement provider as part of its climate-specific engagement themes.
Portfolio coverage target
2025 – 55% AUM achieving, aligned or aligning to net zero; 2030 – 70% AUM achieving, aligned or aligning to net zero; 2035 – 85% AUM achieving, aligned or aligning to net zero; 2040 – 100% of assets achieving or aligned to net zero.
Portfolio decarbonisation reference target
Listed Equity Absolute – (2025:-52%), (2030:-65%), (2050:-100%) Fixed Income – (2025:-54%), (2030:-66%), 2050:-100%)
Listed Equity Intensity – (2025:-52%), (2030:-65%), (2050:-100%) Fixed Income – (2025:-54%), (2030:-66%), (2050:-100%)
Engagement threshold target
Financed emissions under engagement:
Listed Equity – (2025:80%), (2030:100%), (2040:100%); Fixed Income – (2025:80%), (2030:100%), (2040:100%)
GHG scopes included:
Our current Net Zero targets cover Scope 1 and 2 emissions for 60% of our assets under management as at 31 March 2022.
We have not set targets for Scope 3 emissions due to the lack of data availability and standardised estimation methodologies.
However, our Net Zero by 2050 or sooner target assumes that this will include Scope 3 emissions. The table shows the proportion of data that is reported, estimated or where no data is available.
Equities – (Reported:84%), (Estimated:9%), (No Data:7%)
Corporate Fixed Income – (Reported:35%), (Estimated:6%), (No Data:59%)
Total – (Reported:77%), (Estimated:9%), (No Data:14%)
Net Zero Investment Framework
We have used the International Energy Agency (IEA) Net Zero by 2050 (IEA NZE2050) scenario as it is an industry recognised pathway. This scenario provides an ambitious but viable global pathway for reaching Net Zero, underpinned by assumptions based on modelling of the climate science. It also considers realistic innovations that may be developed to limit emissions, with limited reliance on carbon capture and negative emission reduction technologies but significant reliance on renewables and energy efficiency solutions. Our targets, which are based on the sectors and regions that we are invested in, aim for more ambitious emission reductions than the IEA pathway.
Proportion of AUM committed:
At this point, we have not set Net Zero targets for private markets assets, sovereign bonds and multi-asset credit investments, which make up the remaining 40% of our portfolio. We have also not set targets for Scope 3 emissions. This is due to the absence of sufficiently robust methodologies and issues with data quality and availability. We will continue to evaluate the data availability and methodologies and work with the industry with the aim of expanding the scope of our targets once methodologies are established, and data quality improves.
Policy on coal and other fossil fuel investments:
No. We have not adopted a science-based policy on coal and other fossil fuels. We do have an exclusion approach for thermal coal and oil sands based on revenue thresholds. This can be found in our Climate Change Policy and Responsible Investment Policy both of which can be found on the Border to Coast website.
Our commitment to Net Zero is covered in our Climate Change Policy. Work undertaken since the commitment was made in October 2021 is also detailed in our Annual Responsible Investment & Stewardship Report, which can also be found on our website.