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Central Finance Board of the Methodist Church / Epworth Investment Management

PRI reporting framework 2020

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ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation carries out scenario analysis and/or modelling, and if it does, provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

Describe We have undertaken extensive scenario analysis in relation to the oil and gas industry to assess which companies are most aligned with the temperature goals of the Paris agreement.

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

13.3. Additional information. [OPTIONAL]

We exclude stocks on ethical grounds, and compensate for their absence from the benchmark by investing in ethically acceptable stocks that share similar economic characteristics


SG 13 CC.

13.4 CC. Describe how your organisation is using scenario analysis to manage climate-related risks and opportunities, including how the analysis has been interpreted, its results, and any future plans.

Describe

The CFB and Epworth assess the physical and transition risks of climate change over various sectors including the oil and gas sector, mining, building and construction materials, and agriculture. This has led to tailored reports on each topic, building on assessment of scenarios from the IEA/IRENA. 

Describe

Based on the sector specific reports, companies are assessed in the light of the risks and opportunities presented. This may lead to engagement with companies and possible exclusion if the company does not respond, or is deemed too polluting. 

Describe

We have previously excluded companies on the basis of their performance relative to carbon intensity measures and transition risks and opportunities. 

13.5 CC. Indicate who uses this analysis.

13.6 CC. Indicate whether your organisation has evaluated the potential impact of climate-related risks, beyond the investment time horizon, on its investment strategy.

Describe

The CFB has evaluated the impacts of climate-related risks out to 2050 and beyond through the use of scenarios in relation to fossil fuel companies in particular, as well as looking at other sector risks. This forms part of the investment analysis undertaken on companies particularly within the UK portfolio. 

13.7 CC. Indicate whether a range of climate scenarios is used.

13.8 CC. Indicate the climate scenarios your organisation uses.

Provider
Scenario used
IEA
IEA
IEA
IEA
IEA
IRENA
Greenpeace
Institute for Sustainable Development
Bloomberg
IPCC
IPCC
IPCC
IPCC
Other

Other (1) please specify:

          IEA/IRENA 66% 2 degrees
        
Other
Other

SG 14. Long term investment risks and opportunity (Private)


SG 14 CC.

14.6 CC. Provide further details on the key metric(s) used to assess climate-related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Portfolio carbon footprint
          To ensure that the portfolio has a low and measurably declining carbon footprint.
        
          kg per unit
        
          We use a carbon footprint provider.
        

14.8 CC. Indicate whether climate-related risks are integrated into overall risk management and explain the risk management processes used for identifying, assessing and managing climate-related risks.

Please describe

As part of research reports, potential risks are highlighted. ESG considerations, including climate change, are integrated into these reports and discussed within the investment team. 

14.9 CC. Indicate whether your organisation, and/or external investment manager or service providers acting on your behalf, undertake active ownership activities to encourage TCFD adoption.

Please describe

Last year, after analysis of some global banks, we undertook a round of engagement, encouraging the banks to support the TCFD recommendations and asking about their lending policies in relations to the transition to a low carbon economy. 


SG 15. Allocation of assets to environmental and social themed areas

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

1 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

1 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

We actively seek to invest in and engage with companies that are pursuing clean technology. In keeping with our climate change policy, we engage with companies that are advancing towards a low carbon economy. 

Asset class invested

1 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Investment is made through external fund managers

Asset class invested

1 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

We invest in companies that seek to regenerate communities through investment in housing, including schooling and community spaces. 

Asset class invested

1 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

We invest in MJ Gleeson, which is a UK housebuilder that builds affordable homes and in The PRS REIT, which owns and rents out affordable family homes.

15.4. Please attach any supporting information you wish to include. [OPTIONAL]



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