Phoenix’s investment portfolio accounts for 99% of group’s carbon emissions

Written by Adam Cadle

24/05/2023

Phoenix’s current investment portfolio accounts for 99% of the group’s carbon emissions, the insurer’s first transition plan has revealed.

Investments are therefore the main area of focus for the insurer to transition to net-zero by 2050. It said a three-pillar strategy around decarbonising its portfolio, stewardship activities and investing in climate solutions will help to achieve this.

Phoenix said it aims to invest £40m in climate solution funds, of which £10bn will be direct investments in sustainable assets by the end of 2025. Its initial decarbonisation focus is on its £160bn listed equity and credit portfolio, and is developing “customised equity benchmarks which align with a net-zero trajectory”. The customised benchmark is planned for UK and US equities, before rolling out to other regions over 2024 and 2025.

The insurer is to begin work on decarbonising its govvies and real estate portfolio by 2030, which is described as more “challenging asset classes to decarbonise”.

On the issue of stewardship, Phoenix said its activities in this area focus on companies that collectively account for 70% of its financed emissions.

“We have developed a climate change scorecard, which we use to engage with the 25 highest priority companies and support their transition to net-zero," Phoenix said. "The companies were prioritised on the basis of their current emissions, sector, and action-to-date on climate change. Utilities and oil and gas are the most represented sectors, collectively accounting for 13 of the 25 companies."

Phoenix said it would monitor progress at those 25 companies and if, after three years of dialogue, no change is registered it will "recommend the exclusion of assets that do not align with our climate and sustainability strategy".

The UK insurer said it also engaged indirectly with 460 companies through its asset managers, which collectively account for a further 29% of its financed emissions from material sectors.

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