We expect all our fund managers to use a variety of tools, including those listed above, to manage and model climate-related risks as part of their decision making process and to strive for long term carbon reduction.
When appointing new external managers, the carbon impact of their portfolios always at the forefront of our discussions with them and we would not appoint or retain a manager who was not able to demonstrate both an appreciation of these issues and a strong commitment to sustainability. For this reason, all the funds in which we invest tend to have a relatively low carbon footprint and they typically exclude fossil fuel extractive companies, petrol and diesel car manufacturers or airlines. We do not specifically ask for emissions-risk monitoring and reporting within our contracts with our fund managers since, given the low relative level of risk in these areas for our portfolios, we would prefer to prioritise other matters. Instead we prefer to carry out, on an ongoing basis an all-encompassing evaluation of each of our external managers to ensure that their overall approach is compatible with our investment aims and objectives including those relating to climate change.