The Kent Pension Fund Committee has agreed an ambitious policy package to address climate risk, including a headline net zero target of 2050; interim emission reduction goals aligned with limiting global temperature increases to 1.5°C; and a 15% target allocation to sustainable investment assets by 2030.
The package marks the culmination of an extensive work program to evaluate the Fund’s exposure to physical and transition climate risks, an exercise which showed that the Fund’s beneficiaries have a vested interest in the successful decarbonisation of the global economy. By setting a clear ambition to reach net zero carbon emissions by 2050, the Fund is taking a decisive step in meeting this challenge.
In addition to adopting a net zero target of 2050, the Fund will also target a 43% reduction in emissions arising from its equity investments by 2030, and a 69% reduction by 2040. This pathway is consistent with the pace of decarbonisation required by the latest science to limit global warming to 1.5°C, as assessed by the Intergovernmental Panel on Climate Change. As the global economy moves away from fossil fuels over the coming decades, the interim milestones will be critical in helping the Fund to navigate transition risk safely.
The Fund’s approach is grounded in the recognition that a reduction in the Fund’s portfolio emissions must result from real-world decarbonisation. Investors have an important role to play in driving the transition to a low carbon economy and the Fund will invest in companies and industries that are aligned with the transition. The Fund will invest in climate solutions that support wider decarbonisation of the economy.
Commenting on the initiative, Chairman of the Kent Pension Fund Committee, Cllr Charlie Simkins, noted that “Climate risk is paramount for long term investors like the Kent Pension Fund. In setting a formal net zero target and related measures, we are facing the challenge head on. There will be plenty more work for us to do in the years ahead and I am delighted that the Fund has a robust policy framework to help us succeed in this all-important area”.