Our journey to Net-Zero

As an international organization, we recognize the urgency of the climate crisis and the need to take bold action to mitigate its impact. In 2020, the Office of Investment Management (OIM) committed to becoming Net-Zero by 2050. To further cement this commitment, we joined the Net-Zero Asset Owner Alliance in 2020.

The Fund successfully achieved its pledge to reduce the absolute greenhouse gas footprint of its Equities and Corporate Bonds’ Portfolios by 39% in 2022 compared to 2019 levels. The Fund’s 2030 target is to achieve a 40% – 60% reduction compared to 2019 levels.

The UNJSPF published its first TCFD report, which can be found here.

We believe that achieving Net-Zero emissions is not only the responsible thing to do, but also presents an opportunity for us to lead by example and inspire others to act. Find out more about how the UNJSPF is leading the way to Net-Zero. 

We take action through the below three pillars:

The Office of Investment Management (OIM) has set ambitious carbon reduction targets. The UNJSPF has set a 40% absolute reduction target for its public equities, corporate bonds and private real estate portfolios by 2025 compared to 2019 levels and has already achieved a 39% reduction in 2022. By 2030, the Fund will target a reduction of its financed emissions from 40% to 60%. This significant reduction has been reached through divestment from fossil fuels and engagement with portfolio companies.

The fund’s 2025 target is to achieve a 40% reduction compared to the 2019 level. 

Over recent years, OIM has placed its focus on climate change issues, particularly on high emitting companies. In 2022, 72% of environmental engagements were related to climate change. Through this strategy, we aim to:

  • Encourage more climate and carbon disclosure within companies
  • Encourage the adoption of international standards and approved decarbonization targets

Engagement with high emitting companies:

OIM engages with 82 companies, representing the top carbon emitters of our investment portfolio. We adopted an escalation process for companies that do not reach our engagement targets (voting against board re-election).

The engagement strategy has already positively influenced companies: out of our focus group, there are already 21 companies that have set carbon reduction targets in line with the targets that were set during the engagement process.

The Fund’s objective is to identify and invest in companies that are most effectively managing transition risks and are well positioned for the long term. Using a proprietary model, we monitor our current exposure to this theme and identify, within the fossil fuel industry (as quantified by revenues), companies that are already transitioning their business models and that we should still get exposure to.

Access the Fund’s first TCFD report in 2022 here.

Our position on Fossil Fuels

Coal

In line with the Net-Zero Asset Alliance, we believe that companies should develop transition pathways towards decarbonization. There are two main principles we would like companies to adopt:

  • There should be an immediate cancellation of all new thermal coal projects, including thermal coal plant, coal mines and related infrastructure (i.e., supplying products or services to thermal coal-based projects or business models) that are in pre-construction phase.
  • There should be a phase-out of all unabated existing coal-fired electricity generation in accordance with 1.5°C pathways, as provided by the IPCC and referenced by the International Energy Agency (IEA) and Powering Past Coal Alliance (PPCA). The most recent energy system models require an accelerated transition in developed economies including phase outs in most thermal coal assets by 2030 for industrialized countries and a full phase out globally by 2040.

To achieve these two goals, the Fund has implemented two pillars: i) exclusions and ii) an engagement strategy.

Divestment from coal mining, applying a threshold of 1% of revenues coming from thermal coal mining

For the mining sector: strategy based on Capital Expenditure (CapEx) consistent with goals of the Paris Agreement, including no new coal mines and ultimate phase out of coal production for unabated use (no carbon capture and storage) consistent with the objectives outlined in the Paris Agreement.

For the utilities sector: plan for cessation of coal-fired power by 2030 in the Organisation for Economic Co-operation and Development (OECD) Member countries and by 2040 in other countries, in line with the Powering Past Coal Alliance (PPCA) goals.

We will engage beyond this timeframe with companies which fail to align with these ambitions.

Oil & Gas

We support the Alliance position on fossil fuels. In particular, for oil and gas, we believe that:

  • For the Upstream sector: no new oil and gas fields should be financed, built, developed, or planned. Investment should be limited to existing oil and gas fields (with an emphasis on investment that is required to support the global economy during the energy transition).

The Fund has implemented two strategies related to oil & gas:

Divestment from companies with revenues from oil and gas exceeding 10% across the entire value chain (upstream, midstream, and downstream) and including unconventional fossil fuels (shale oil & gas, oil sands production, unconventional drilling techniques).

Despite having divested from the upstream industry, we participate to investor engagement networks, such as Climate Action 100+

We also engage with transitioning companies and companies where revenues fall below our threshold

Finally, we ask financial services companies to align their financing, underwriting and investing activities with the goals of the Paris Agreement and the achievement of net-zero emissions by 2050.

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