PIC expects more assets aligned to 2º C trajectory
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Pension Insurance Corporation increased the proportion of its public corporate credit portfolio that is aligned to a trajectory of no more than 2º C above pre-industrial levels in 2022.
According to the insurer’s second Task Force on Climate-related Financial Disclosures guidelines report, 'Climate Action: Progress Towards Net Zero', which sets out the firm’s climate-related disclosures, 70% of PIC’s public corporate credit portfolio - where data is available - is aligned to a trajectory of 2º C or below, compared with 60% in 2021.
Simon Abel, chief strategy officer at PIC, said: “For the second year running, our TCFD report reinforces our ongoing transparency to our strategy, governance, risk management processes and key metrics for managing the impact of climate change on the business and our investment portfolio.”
The defined benefit pensions insurer used a metric called implied temperature rise for assessing its corporate credit holdings, applying ratings provider MSCI’s implied temperature rise model, based on the issuer’s most recently reported Scope 1 and 2 emissions and estimated Scope 3 emissions.
PIC explained: “An implied temperature rise considers the existing and expected future emissions of the issuer and compares the emissions to Paris-aligned pathways for the specific economic sector and region of the issuer.”
It said for the assets where data is available, 41% of its exposure was aligned to a trajectory of up to 1.5ºC, with a further 29% up to 2º C.
However, PIC stressed that given the complexity in calculating this metric, the company only had coverage for a subset of its publicly listed portfolio from MSCI.
It said data was available for 65.5% of its public corporate credit assets, which is 46.7% of its total portfolio.
“This means that there is temperature alignment data for 30.5% of the total portfolio,” said the insurer.
Currently, PIC’s weighted average implied temperature rise for assets where data is available is 2.08º C, a decrease from its 2021 figure of 2.37º C.
The insurer said in its report: “Some of the drivers of this decrease include our portfolio decarbonisation efforts, a natural decarbonisation of the companies we invest into and having access to more data on companies with lower temperature alignment.”
PIC is committed to decreasing investment carbon intensity by 50% by 2030 from a 2019 baseline.
The company’s approach to climate risk is incorporated into the group’s sustainability strategy and overseen by the board.
How can insurers improve the availability of data from companies?
