ESG Club interview – Border to Coast


influence companies to drive change in the companies we invest in. We believe the most effective mechanism is through active engagement. We do this directly and through our mem- bership of initiatives and investor groups, such as Climate Action 100+ and the Local Authority Pension Fund Forum (LAPFF). This is to push businesses to take real steps, whether that’s reducing emis- sions and setting reduction targets or addressing social aspects, such as mod- ern slavery. We believe engagement secures lasting, positive changes that will make a real con- tribution to achieving the low-carbon transition the world needs. We have seen positive outcomes with companies mak- ing net-zero commitments and improv- ing disclosures. However, this year we have seen some companies backsliding on previous com- mitments, so it’s important that as an investor we continue to hold those com- panies to account and have those chal- lenging conversations. We also use the power of our collective voice to engage with and influence regula- tors, policymakers and the wider industry to put the measures in place required to have a real-world effect.


In what circumstances do you consider divestment? And how often have you used it?


Our belief in engagement does not mean that we will hold companies that are under engagement indefinitely. We have an engagement escalation strategy, which forms part of our responsible investment policy. If companies are not responding we may need to escalate our approach. We will do this through a number of chan- nels including voting and filing share- holder resolutions; divestment in individ- ual companies is an important part of this engagement toolkit. Whether a company is responding to investor engagement or not also forms part of our investment decision-making.


36 | portfolio institutional | June 2023 | Issue 124


We need all sectors of the economy to make and enable the transition.


For example, climate change issues were part of the decision to sell our position in a range of companies, such as Exxon and Korean utility KEPCO.


What did you make of the last COP? And what do you hope for from the next one? COP27, in the vast majority of areas, failed to live up to its billing of the ‘Imple- mentation COP’. There were some posi- tive developments including the agree- ment of a formal work programme on a just transition and the establishment of a loss and damage fund. However, there remains a distinct lack of agreement on how plans should be put into action. The main issue as an investor is that slow progress means the risk of not meeting that key 1.5-degree target by 2050 increases, and so we will continue to engage as an active steward and responsi- ble investor to manage and mitigate that risk over the long term.


Do we expect more from COP28? It is dif- ficult to say. As responsible investors, our fiduciary duty is to ensure that we identify the risks and opportunities of climate change and act in the best interest of all our stakeholders – and the planet.


The risks are well identified. However, with regards to the opportunities, we hope for more decisive action in the area of climate finance to scale up mobilisa- tion of private capital in low-carbon miti- gation and adaptation projects, across all sectors, vital for the rapid transition to a low-carbon economy.


Our dedicated £1.35bn Climate Opportu- nities offering is an example of Border to Coast’s commitment to facilitating increased investment in climate transi- tion solutions. This is invested over a three-year period targeting investments that will have a positive impact on climate change and support long-term net zero carbon emission goals. It includes invest- ments across private equity, infrastruc- ture and private credit. The BridgeTown initiative from COP27 – which set out to address immediate finan- cial needs while also starting to address systemic issues requiring transformation of the financial system – was a positive start. We will be watching to see how this proposal is further developed. Hosting the conference in another influ- ential petro-state could be seen as prob- lematic in formalising agreement, but it is hoped that commitment to a global stocktake of the Paris agreement may help focus minds.


What is next for Border to Coast on ESG? We will continue to progress our three- year responsible investment strategy, which is made up of four pillars: ESG integration, active ownership, industry engagement as well as governance.


reporting and


This is our second year in the three-year strategy and was developed to ensure we can support our partner funds, who are, of course, local government pensions funds, in delivering against their steward- ship responsibilities in line with regula- tions. As active stewards and our focus as long-term investors, we will continue to work to make a difference with the collec- tive voice that pooling brings.


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