Engagement vs divestment

Right across our partnership, we share a deep commitment to Responsible Investment and welcome engagement on the issue.

Following extensive engagement with clients and many of their stakeholders we, Brunel Pension Partnership, launched our Climate Change Policy in January 2020. The Policy was refreshed in March 2023 and, following a Climate Stocktake, we launched our revised Climate Change Policy 2023-30.

Our Policy is clear that the financial system is not fit for purpose to deliver a world that limits global warming to well below 2°C, ideally to 1.5°C.  Our policy clearly states our commitment to support achieving Net-Zero well before the 2050 deadline.

The policy sets out a five-point plan to build a financial system which is fit for a low carbon future.  This is essential as Brunel and all the Partnership funds operate within a regulatory framework – a framework very different to that in which charities, endowments or, indeed, asset owners and managers in other countries operate. It is essential we change the system, not just our portfolios.

To support making fundamental changes in our financial system, our strategy includes policy advocacy. We advocate mandatory climate disclosures, challenging fossil fuel subsidies and asking for positive policies to encourage actions that assist with decarbonising our economy. We support moves to apply a price on carbon, and to incentivise green investment.

Investing positively

However, we are not waiting on incentives. The managers of our sub-funds already invest extensively in renewable energy as well energy efficiency, public transport, smart grid and other technologies that support transition.

It is critical that we do not just focus on the supply side – the fossil fuel companies – but also on the demand side, looking at fossil fuel consumption, and at the wider financing of projects. When it comes to climate risk, we assess the whole value chain and engage with companies to take responsibility for their product throughout its usage, not just in its manufacture. (The examples below demonstrate the breadth of our engagement.) This issue is wider than climate change, hence our Responsible Investment Policy includes supply chain issues as one of its core themes.

We have also been very active in seeking mandatory climate disclosure. For example, Faith Ward, Chief Responsible Investment Officer, sits on the Pensions Climate Risk Industry Group, which was established by various government departments, including the DWP and Pensions Regulator. In 2020  the Group launched a consultation on a new guide to climate-related financial risks for pension schemes.

Our policy also identified the need to develop and decarbonise the products we offer. It is important to note that Brunel does not select companies to invest in itself. Instead, stock-specific decisions are made by the asset managers we employ. The Brunel Partnership does, however, set the investment guidelines under which they operate.  These guidelines are co-developed with all ten Brunel clients, which means we can create products that meet the requirements of pooling, most specifically on cost savings.

Fossil fuel exposure

As background, our active portfolios have a low and declining exposure to fossil fuel companies, as evidenced in our Carbon Metrics Report. Standard practice is to use mainstream indices to gauge many aspects of our performance – the trajectory of these indices is well over 3°C. This is an industry-wide issue that arises from carbon not being consistently priced into assets – we know we need better solutions to make meaningful measurements. The Brunel Partnership is now working on a project to identify solutions that meet all client investment objectives, specifically long-term investment returns, in a cost-effective manner. (Please note that details of holdings in our client funds can be obtained from the councils themselves, usually from the council website.)

Engagement & Divestment policy

On the issue of divestment, Brunel supports divestment from specific fossil fuel and other carbon-intense companies, if they present a material investment risk – such as due to ‘stranded assets’ – but this is based on analysis by our asset managers. Brunel expects managers to take these decisions independently.

In addition, we have committed to reviewing this approach and, indeed, the holdings themselves; and evaluating whether companies are taking steps to manage climate risks and to enable our overall alignment with the Paris Agreement. Brunel set out clear expectations for its asset managers and a deadline of 2022 for reviewing companies – our Climate Stocktake was conducted in 2022. (Our new Climate Change Policy was published in March 2023.)  The criteria to evaluate companies and managers is being developed with our clients. It takes into account different investment mandates and starting points, but always with reference to Paris alignment.

We chose not to use exclusion lists with our active managers.  Instead, we require them to analyse the companies and other entities they invest in, and to justify their investments in those companies with higher greenhouse gas emissions. We do not currently issue exclusion lists because what is most needed is change in the way investment managers work. Simply enforcing exclusions, or requiring divestment from specific stocks or sectors, will not compel investment managers to develop their capacity on climate change or to drive change in the companies they hold. Climate then becomes a technical operational matter, not an investment priority.

We strongly believe in engaging with perseverance, but selective divestment does and will continue to be part of the tool kit.

Manager monitoring

However, while we will not instruct managers to exclude certain stocks, we do expect their portfolios to have materially reduced climate exposures. We also expect them to justify any climate-controversial holding. If investment managers are not able to explain their investment strategies robustly and credibly, and to lay out how they have managed climate risk, we will look to replace them.

If we find that our investment managers’ engagement with companies is ineffective – and that the companies’ trajectory is therefore not Paris-aligned – we will consider whether to remove those managers or introduce specific exclusion criteria for the companies concerned.

Monitoring our policy and holdings

As we take steps to address climate change we are transparent about our holdings, the climate intensity and fossil fuel exposure of our portfolios, and the outcomes of engagement.  These are consistent with the expectations of the Financial Reporting Council’s 2020 Stewardship Code and Taskforce for Climate-Related Financial Disclosure – indeed, in many places, we exceed them.

Our Carbon Metrics Report gives greater detail on how we assess the carbon footprint of our portfolios

Our Responsible Investment & Stewardship Outcomes Report analysed our performance on a range of RI issues, from climate change to tax transparency. It showed that all active portfolios had achieved more than 7% carbon intensity improvements against their benchmarks and provide case studies of our engagement outcomes

More recently, we helped to develop and launch the IIGCC Net Zero framework, the first practical framework to guide asset owners and managers seeking to become Net Zero investors. While we are pleased with this progress, we also acknowledge that both climate change policies and findings from investment data continue to evolve and, in line with this, we continue to review our own policies.

Action leading to change

We have provided some examples of engagement that directly and indirectly relate to investment in fossil fuels.

It is important to note that the commitments made by BP, Shell and Glencore include scope 3 emissions, to one extent or another. This means that commitments we are seeing coming through are getting closer to meeting our need to cover the complete supply chain of the product e.g. the consuming, purchasing and then burning of fuel.


In February 2020, BP announced new ambitions to be a ‘Net Zero company by 2050 or sooner’
Targets include:

  • Net Zero across BP’s operations on an absolute basis by 2050 or sooner
  • Net Zero on carbon in BP’s oil and gas production on an absolute basis by 2050 or sooner
  • 50% cut in the carbon intensity of products BP sells by 2050 or sooner
  • Installation of methane measurement at all BP’s major oil and gas processing sites by 2023
  • Reduction in methane intensity of operations by 50%
  • Increase in the proportion of investment into non-oil and gas businesses
  • This builds on extensive positive engagement through our engagement partner, Federated Hermes and Climate Action 100+ (the largest global investor coalition on climate change)
  • More information on commitments made by BP can be found here and here


  • In 2019, we co-signed a letter to Glencore calling for support of the statement to ensure investors can legally hold Glencore to the commitments it made as part of its recent announcement
  • Extensive engagement through Climate Action 100+ and our engagement provider, Hermes EOS – Glencore has agreed to review its links with trade associations to identify lobbying activities that could undermine its support for the Paris Agreement
  • For the first time, this year, the company has agreed to start reporting on scope 3 emissions and will do so on an annual basis.
  • It has committed to report annually on the extent to which the company’s capital expenditure and investments were in line with the goals of the Paris Agreement.
  • It has also committed to publishing new, longer-term targets, based on policy and technical developments, which will be made public in the company’s 2020 Annual Report


  • Shell has committed to achieving Net Zero emissions by 2050 or sooner. It also has the ambition to bring its net carbon footprint in line with the goals of the Paris Agreement
  • Extensive engagement through our engagement provider, Federated Hermes and Climate Action 100+, enables investors to hold Shell accountable to its targets
  • More detail about Shell’s commitments can be found here


  • Brunel, on behalf of our Clients, co-filed a shareholder resolution formally requesting that Barclays phases out the financing of fossil fuel companies. This was the first climate change resolution to be filed at a European bank
  • It asks Barclays to publicly disclose how it plans to stop the provision of financial services to energy sector companies that are not aligned with the goals of the Paris climate agreement; it also asks how Barclays aims to understand whether a borrower is meeting Paris Agreement targets
  • The resolution passed in May 2020, exceeding the 20% threshold required (23.95%). This requires Barclays to consult with shareholders and publish the views received and actions taken within six months
  • Barclays has committed to being a net-zero bank by 2050. It has started to set transparent targets and will be reporting progress against them from 2021. We continue to engage with Barclays and look forward to receiving more detail on its strategy and targets, as committed, later this year
  • More information on the commitments made by Barclays can be found here


  • Our extensive engagement with Blackrock, including a one-to-one meeting with Larry Fink, CEO, led to the company agreeing to prioritise sustainability through their investment and stewardship approach
  • Blackrock agreed to join Climate Action 100+ and take the lead on engaging with China Steel
  • Blackrock recently took a public stance against companies who are not taking appropriate action on climate risk by voting against 53 companies and putting another 191 on ‘watch’. See FT article
  • Of the 53 companies it voted against, 37 were in the energy sector. Blackrock will vote against management again in 2021, should these companies not make significant progress
  • More detail of Blackrock’s commitments can be found here

To read more about our position, including our view on carbon pricing and detail on why we co-filed the Barclays resolution, please see the FAQs section of the Climate Change section of our website.


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