“Universities Superannuation Scheme Ltd – the trustee of the UK’s largest private pension scheme by way of assets – has reinforced its view of climate change as a financial risk to the returns generated by its assets by announcing its ambition to be Net Zero for carbon by 2050, if not before.
The ambition is in line with the Paris Agreement, to which the UK is a signatory, which was designed to limit global warming below 2 degrees centigrade. In order to meet this target, global climate emissions will need to meet Net Zero by the middle of this century across all sources of emissions – Scope 1, 2, and 3.
Today’s announcement is the latest development in the long-standing history USS has of recognising climate change as an investment risk. Our first work on this was completed in 2001 leading to the launch of the Institutional Investors Group on Climate change (IIGCC). Last year, USS Investment Management, the principal investment manager and advisor to USS, went a step further when it announced plans to exclude (and disinvest where necessary) from a number of sectors deemed to be financially unsuited to the scheme over the long-term, including thermal coal mining (where this makes up more than 25% of a company’s revenues). The burning of coal is responsible for 40% of carbon dioxide emissions worldwide and accounts for 70% of total greenhouse gas (GHG) emissions from the electricity sector.
USS Investment Management will now develop a comprehensive strategy in order to deliver on this Net Zero ambition while remaining mindful of its fiduciary duties. The transition, which will not rely on the Scheme buying carbon offsets, will not only require a fresh focus by its internal investment teams in terms of where and how we invest, but it will also require USS to work with peer funds, our external asset managers, and others in the investment value chain in order to deliver against this ambition.”
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