Progress in fossil fuel subsidy reform “remains very weak” due to the war in Ukraine causing energy security to dominate policy debates, according to a report by Brunel Pensions Partnership.
The Local Government Pension Scheme (LGPS) pool’s first Climate Stocktake Report summarised the implementation of its Climate Change Policy in the period between 2020-2022.
An analysis of the issues that Brunel has focused on as part of its policy advocacy programme found significant progress in areas such as mandatory reporting and knowledge. However, other issues, including fossil fuel subsidies, “remain some way from being fully addressed through policy or regulation”.
“Progress in the area of fossil fuel subsidy reform remains very weak, exacerbated by the war in Ukraine which has seen the issues of fuel poverty and energy security dominating energy policy debates,” the report said.
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The report detailed that the conflict in Ukraine has meant that addressing certain regulatory barriers, such as fossil fuel subsidies, has been a lower priority for governments. “In some cases (e.g. the UK government’s policy shifts on awarding oil and gas and fracking permits), policy has moved backwards,” it added.
However, the report highlighted that Brunel has made significant progress relative to its net-zero goals as it is ahead of its target to reach the net-zero halfway point by 2030. It also detailed that the LGPS pool has engaged with all its investment managers on climate change, developed market-leading investment products, and made significant investments in green assets via its infrastructure and secured income portfolios.
David Vickers, Brunel’s chief investment officer, said: “We believe it is our fiduciary duty to manage climate change and associated risks and opportunities within our investment portfolios. Climate-related risks impact all investment strategies and mandates, whether active or passive, and across both long and short time horizons.”
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