UNJSPF intends to exceed NZAOA target, using divestment to achieve short-term portfolio-level emissions reductions.
The United Nations Joint Staff Pension Fund (UNJSPF) intends to reduce its portfolio emissions by 40% by 2025 and has set an interim target to cut emissions by 29% by the end of this year.
As a member of the UN-convened Net Zero Asset Owner Alliance (NZAOA), the fund is bound by a target-setting protocol issued in January to cut emissions by between 16-29% by 2025.
“With this ambitious commitment, we want to accelerate the transitioning of our investments towards a 1.5°C scenario, addressing Article 2.1c of the Paris Agreement,” said Pedro Guazo, Representative of the Secretary-General for the investment of UNJSPF assets. “The UNJSPF believes that it should serve as an inspiration for the industry.”
The commitment means that greenhouse gas emissions financed by investments made via the UNJSPF’s equities and corporate bonds portfolios will be reduced by 40% compared with 2019 levels. Short-term portfolio-level reductions will be achieved mainly via divestment, but engagement activity will also be deployed in the medium term.
The UNJSPF will also monitor sector targets on the Alliance’s priority sectors (oil and gas, utilities, steel, cement and transport, taking action to prompt further greenhouse gas emission reductions, in line with the Alliance’s recommendations.
The fund will prioritise engagement with the largest polluters in its portfolios and increase exposure to firms identified as transitioning to net-zero and sustainable business models. UNJSPF completed divestment from coal in 2020.
“We want to ensure companies’ strategies, activities and actions are aligned with the goal set in the Paris Agreement,” said Toru Shindo, Chief Investment Officer at the Office of Investment Management (OIM) of the UNJSPF.
The UNJSPF provides retirement, death, disability and related benefits to over 215,000 staff, retirees and beneficiaries of the UN and 24 other member organisations. The OIM is responsible for the investment management activities of the UNJSPF, overseeing US$85 billion of assets.
The NZAOA recently expanded its membership to 42 global asset owners, pushing total assets under management (AUM) to US$6.6 trillion.