Climate change

The Devon Pension Fund believes climate change poses significant risks to global financial stability and could thereby create climate-related financial risks to the Fund’s investments, unless action is taken to mitigate these risks. We are committed to working with the Brunel Pension Partnership to decarbonise our investments in listed portfolios.

Net Zero Commitment

The Devon Fund is a member of the Institutional Investors Group on Climate Change (IIGCC). The IIGCC enjoys a strong international reputation for providing robust, insightful thought leadership across the climate agenda informed by leading members of the investment community committed to action on climate change.

The Devon Fund is a signatory to the IIGCC’s Commitment to achieve net zero portfolio greenhouse gas emissions by 2050 or sooner. The full commitment statement, launched in March 2021 can be found here.

In order to achieve this goal, the Fund has set an initial target of a 7% per annum reduction in the Weighted Average Carbon Intensity (WACI) of the Fund’s investments, based on the March 2019 calculation of the WACI, to be reviewed in 2022. This recognises the need for significant progress in the earlier part of the period to 2050, with the intention of achieving a 60-75% reduction by 2030. These targets will also be applied to the Fund’s exposure to fossil fuel reserves as a proxy for downstream scope 3 emissions which are not captured within the WACI calculation.

Carbon Footprint

A key part of the approach is to regularly measure the carbon footprint of the Fund’s equity investments. Calculating the impact of a company’s emissions involves looking not only at the operations of the company itself, but also looking at the impact of the products that it sells and the impact of its supply chain. These are illustrated in the following diagram:

Emissions scopes chart

The WACI for each portfolio and for the Fund’s total equity holdings as at 31 March 2019 and as at 31 December 2019 is shown in the graphs below.

This is the third annual assessment of the Fund’s carbon footprint. Progress since March 2019 is shown in the following chart, with the proportionate contribution from each equity portfolio also highlighted.

The chart shows an overall reduction of 37% in the Fund’s WACI since March 2019, which is good progress towards the target of a 50-75% reduction by 2030, and well ahead of the 7% per year target.

Reserves Exposure

One of the issues with the WACI measurement is that it does not capture the downstream tier 3 emissions. Downstream Scope 3 emissions based on product in use (or disposal) are not widely calculated by companies or reported. However, downstream Scope 3 are critical when looking at the impact / investment risk of car manufacturers and fossil fuel companies. This is linked with the risk involved in stranded assets, where companies may have large reserves of fossil fuels that will not be usable if we are to achieve carbon reduction targets across the economy and so become “stranded”. Exposure to reserves data is often used as a proxy for downstream emissions.

The reserves exposure for each portfolio and for the Fund’s total equity holdings as at 31 December 2020 is shown in the graph below. The figures shown are on a value of holdings basis, which means the value of any company with fossil fuel reserves is included in full in the analysis, regardless of what proportion of their business relates to extraction.


The following graph shows progress to date since March 2019.

Overall, reserves exposure has fallen from 9.3% to 3.8% on a value of holdings basis.

Engagement and Disinvestment

A key focus of the net zero commitment is on achieving real economy emissions reductions. That means we want to engage with the companies we are invested in and seek reductions in their emissions, not just disinvest. Disinvestment may make us look good, but is likely to have less impact on achieving real reductions in emissions across the global economy.

In practice the Fund will look to achieve its targets through a combination of investee companies reducing their emissions, and rebalancing portfolios to reduce their carbon exposure.

The Devon Fund supports the Brunel Pension Partnership’s approach to climate change and engagement and divestment.