Note on SG01.2 - Application of policies:
Please note the application of the policies in SG01.2 varies dependent on the policy. E.g. The Screening and Exclusions Policy (USS's Ethical Policy) only applies to USS's Investment Builder ethical fund and ethical lifestyle options; and we do not have standalone environmental, social and governance guidelines for every individual asset class. However, USS's Statement of Investment Principles, and Investment Beliefs apply to the whole scheme.
With regards to the transition to a lower-carbon economy:
USS was among the first pension funds globally to recognise the potential implications of climate change for long-term investors.
In 2001 we published an industry leading discussion paper: Climate Change: a Risk Management Challenge for Institutional Investors. Later that year we co-founded the Institutional Investors Group on Climate Change (IIGCC), which provides a forum for European institutional investors to collectively engage with policymakers on the long-term risks and opportunities of climate change. The scheme made its first investment dedicated to renewables and clean tech in 2000.
In the years since, we have demonstrated our leadership on the issue of climate change by constantly advocating for it to be squarely on the agenda of institutional investors.
- IIGCC: USS provided the first ever Chairman for the IIGC and continues to hold a position as advisor to the Board. The organisation has developed Global Climate Change Disclosure Frameworks setting out investor expectations of disclosure from companies in industry sectors (including automotive, oil and gas, and electricity).
- CDP: We have been a signatory to CDP (formerly the Carbon Disclosure Project) since its first iteration in 2002. CDP offers a framework for companies to follow when providing key climate change data to their investors.
Climate change represents potentially significant risks for the assets in which we invest. The way in which our investee companies and assets manage these risks is therefore a key concern, in line with our responsibility to safeguard the fund for the long-term benefit of our members. We expect companies in which we invest to analyse climate change risks, both in terms of their carbon emissions and how they are adapting to a changing climate, and to develop mitigation plans.
There are three key areas in which we undertake activity on climate change:
- Encouraging disclosure of carbon emissions and information on how companies/assets are managing climate risks.
- Engaging with companies to encourage better management of climate risk. We regularly discuss climate change at meetings with companies, as part of our ongoing engagement.
- Engaging with policy makers to ensure appropriate climate change policies are established to encourage the transition to a low carbon economy. Most of our engagement with policy makers on climate change is conducted through the Institutional Investors Group on Climate Change (IIGCC). Over the years, USS has met with policy makers from governments from across the EU, the European Commission itself, the UK government and also representatives from the Australian government and the Province of Alberta (the home of oil sands).
Further information on USS's activities and approach to climate change risk management is available at https://www.uss.co.uk/how-uss-invests/responsible-investment/activities/climate-change.