The Kelda Group Pension Plan’s recently published ‘Climate change report’ for the year to 31 March 2025, details the Trustee’s actions and intentions regarding climate-related risks and opportunities.
Corporate Bond Portfolio Targets Enhanced Sustainability
For the fiscal year ending March 31, 2025, the Trustee customized its sustainable policies within the investment guidelines for its corporate bond portfolio. The objective is to increase the proportion of the corporate bond portfolio aligned to a Net Zero (or similar) pathway to 100% by 2030. This initiative aims to better protect against long-term systemic climate risk and capture climate opportunities. The Plan’s progress against its target to increase alignment to science-based net zero for its corporate bond holdings (by portfolio weight) materially increased to approximately 55% as of December 31, 2024, up from around 40% as of December 31, 2023. This progress is attributed largely to the change in sustainability guidelines. The Trustee will monitor progress annually. (Source: Climate change report, page 4, 18)
Long Lease Property Allocation Introduced Post-Fiscal Year End
Following the fiscal year end, the Plan introduced an allocation to long lease property as part of its new investment strategy. This change was implemented after the period covered by the report. The Trustee’s climate scenario analysis, conducted in February 2025, considered the potential impacts of this new allocation. The analysis indicated that while long lease property may improve investment outcomes, it also increases risks, particularly in a High Warming scenario where it could have the most detrimental impact in the long term (20 years and onwards). (Source: Climate change report, page 11, 29)
Engagement with Managers on Data Quality and Climate Practices
In March 2025, the Trustee engaged with its corporate bond manager, Insight, to review progress against its SBT alignment target and discuss how data coverage for the asset-backed securities mandate is expected to improve over time. The Trustee encouraged Insight to evolve its data collection and reporting practices. The Trustee also identified its asset-backed securities holdings and some illiquid asset class managers as specific targets for engagement to improve data quality, noting significant gaps in these areas. (Source: Climate change report, page 18)
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