Strategic Investment Shift in Credit Mandates
In February and March 2024, the Fund fully exited the CQS Credit Multi Asset Fund. Subsequently, in May 2024, the capital was reinvested into the TwentyFour Strategic Income Fund. This multi-asset class mandate was selected because its manager actively incorporates Environmental, Social, and Governance (ESG) issues into its investment analysis and decision-making process, aligning with the Fund’s investment strategy objectives. (TCFD Statement, page 2, 8, 11)
Integration of Green Gilts in LDI Strategy
The Fund has provided its Liability Driven Investments (LDI) manager with discretion to invest in green gilts within existing mandate guidelines. This is permitted when the manager believes it will benefit performance, liquidity, or risk management. (TCFD Statement, page 11)
Enhanced ESG Integration in Buy & Maintain Portfolios
In 2022, the Fund incorporated climate enhancements into its Buy & Maintain mandates, leading to exclusions of high-emitting sectors such as coal. In 2024, the Trustee approved LGIM’s proposal to include Euro-denominated bonds in the LGIM Global Buy & Maintain Credit Portfolio’s opportunity set, which is expected to benefit the portfolio’s climate alignment metric coverage. The Fund also switched its exposure in Insight Investment’s segregated Buy & Maintain mandate to two pooled Buy & Maintain funds also managed by Insight, noting consistent ESG processes between the offerings. (TCFD Statement, page 10-11)
Climate Target Recalibration Under Consideration
The Fund has a primary target of a 50% reduction of Scope 1 and Scope 2 carbon footprint by 2030, compared to a 31 March 2022 baseline, consistent with its aspirational goal to align with the Paris Agreement. However, the Trustee recognizes that these targets were set assuming a reasonable pace of low-carbon transition, which is not materializing. Consequently, the Trustee acknowledges that these targets may need to be recalibrated in the short-to-medium term due to fiduciary duties and the prevailing policy environment. (TCFD Statement, page 2, 12, 19)
New Metric for Data Quality Monitoring
In February 2024, the Trustee adopted the Partnership for Carbon Accounting Financials (PCAF) Data Quality Score as an additional climate change metric. This metric monitors the reliability of companies’ emissions data, with scores ranging from one (highest quality, independently verified) to five (lowest quality, estimated from industry peers). This was chosen to provide further insight into the reliability of underlying climate data and identify areas for engagement. (TCFD Statement, page 2, 6, 11, 17, 30)
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