The Church of England (CofE) Pensions Board has published its first annual Stewardship Report, highlighting a number of industry collaborations, as well as progress on climate issues.

In particular, the report revealed that the weighted average carbon intensity of the board's equity portfolio was 42.3 per cent under benchmark as of December 2020, whilst a total of £800m has been invested through the FTSE-TPI Climate Transition index.

Alongside this, the board highlighted recent work around engagement, confirming that the board has engaged with 632 companies on issues around climate change, indigenous community rights, mining safety, diversity and executive pay.

It has also committed to a long-term engagement goal, looking to develop a 2030 vision for a “reformed mining sector” that addresses systematic changes.

The board explained that whilst it may be "easy" as an investor to walk away from the mining sector, this would be "at odds" with the demand for the resources that are mined, many of which are needed both for everyday life and the low-carbon transition.

“Through the Anglican Communion we are also uniquely exposed to the impact of mining in many communities and have been working with His Grace the Archbishop of Cape Town, Thabo Makgoba, in South Africa to trial certain approaches,” it stated.

“Based upon our ethical policy, the board is determined to play as constructive a role as possible to drive long-term systemic change within corporate practice in the sector.”

Commenting on the report, chief responsible investment officer, Adam Matthews, added: "We have demonstrated that our approach can drive real world change.

“As we move through this critical decade the board has set two strategic stewardship priorities, covering issues that will impact our members and the world they will retire into: climate change and extractive industries.

“These issues are inextricably linked and require systemic changes in the way companies operate, pension funds invest and in how we steward our assets."

However, the report emphasised that “no single pension fund or investment manager” is sufficiently large or influential enough to drive the scale of change needed, emphasising the importance of collaborations across the finance sector.

“We work in partnerships with others to achieve our objectives, leading major collaborations across the finance sector and intend to continue this approach," added Matthews.

Indeed, the report confirmed that the board will be continuing to work in partnership with the UN and the Swedish National Pension Funds to establish a self-financing global institute, which will manage the implementation of the newly developed Global Industry Standards on Tailings Management.

The group has also been working with Sweden’s AP7 pension fund and France’s BNP Paribas Asset Management in order to publish a global industry standard on corporate climate lobbying.

This is expected to identify good practice of lobbying activities undertaken by industry groups, and how they can lobby positively in support of the low-carbon transition.

In addition to this, the board will be leading a programme of work together with the Council on Ethics of the Swedish National Pension Funds and CalPERS, the largest US Pension fund, to develop a framework to support companies making climate commitments and working through their value chain to implement these.

It has also committed to developing, together with other national investing bodies, an ethical investment policy on big tech.

Commenting on the plans, CofE Pensions Board chair, Clive Mather, added: “The CofE Pensions Board is determined to collaborate as effectively as possible with other funds and institutions.

"This puts us in the best position to serve the long-term interests of our members and stakeholders.”

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