UK Pension Funds Called On to Review $110 Billion Oil, Gas Stake
Alastair Marsh and Frances Schwartzkopff
Tue, June 27, 2023
(Bloomberg) -- UK pension funds are dangerously misaligned with the goal of reducing greenhouse gas emissions fast enough to limit global warming to the critical threshold of 1.5C, a fresh study has found.
The industry holds more than £88 billion ($110 billion) in bonds and equities issued by fossil fuel companies, according to a report published Wednesday by Make My Money Matter, a climate finance campaign co-founded by Love Actually director, Richard Curtis. That’s roughly 10 times as much as UK pension funds hold in listed FTSE 350 clean energy stocks, it said.
To reach net zero emissions by 2050 and prevent catastrophic overheating, the investment industry needs to allocate four times as much capital to renewable energy as to fossil fuels by the end of this decade, according to an analysis by BloombergNEF. And the International Energy Agency has made clear that halting new fossil fuel expansion is the only way to reach the 1.5C goal.
“As a result, we believe that ongoing investments in fossil fuel companies by the UK pensions industry – without a serious, time-bound and co-ordinated escalation in how investors use their stewardship role – represents a ticking time bomb for both our pensions and the planet,” the authors of the report wrote.
Specifically, Make My Money Matter is urging pension funds to get the fossil fuel companies they hold to rule out new oil and gas expansion, in line with a 1.5C trajectory. Funds should also vote against companies that continue to expand their fossil fuel business. If companies can’t live up to these criteria, public divestment “within set timeframes” should be the next step, according to the authors.
The Pensions and Lifetime Savings Association is “committed to working with members to help them achieve their net zero goals,” Joe Dabrowski, PLSA’s deputy director of policy, said in an emailed comment. “Pension schemes have a significant interest in ensuring that the companies they invest in are fully prepared for a lower carbon future” and can use their votes as shareholders to that end, he said.
He also called on the government to establish clearer guidelines for the industry.
Some firms are already divesting. Last week, the Church of England Pensions Board said it was blacklisting all oil and gas assets, a move that entailed offloading its stake in Shell Plc. That followed an announcement by the oil major that it was stepping up spending on fossil fuels and limiting investment in renewables to projects.
A separate Church investing body, the Church Commissioners for England, made a similar announcement. The two investors represent a combined $17 billion in assets.
The broader UK pensions industry, which manages about $3.7 trillion, remains heavily exposed to Shell, however, the report found. About 70% of the funds analyzed said their biggest holdings included Shell and 60% held BP shares among their top picks, while none had renewable energy stocks among their leading selections.
Continued investment in a growing fossil-fuel industry adds to the risk of “a disorderly transition,” the authors of the report said.
A separate study, published by five nonprofit organizations including Reclaim Finance, found that the 30 biggest asset managers hold at least $3.5 billion in newly issued bonds from companies actively engaged in fossil fuel expansion.
In total, the firms analyzed held almost $600 billion in bonds and stocks in the biggest developers as of January, according to the report. Researchers also noted that the figures likely underestimate actual holdings because asset managers don’t always disclose everything they own.
The holdings reflect unsuccessful efforts to engage with fossil fuel companies, according to the report. It singled out Climate Action 100+, a $68 trillion investor group with a stated goal of working with companies to help them transition to low-carbon business models.
“After five years of intensive dialogue by investors from the CA100+ initiative, only 20% of the companies from the coal mining and oil and gas sectors that have been engaged have even set an ambition to achieve net zero emissions by 2050,” the nonprofits said.
Alastair Marsh and Frances Schwartzkopff
Tue, June 27, 2023
(Bloomberg) -- UK pension funds are dangerously misaligned with the goal of reducing greenhouse gas emissions fast enough to limit global warming to the critical threshold of 1.5C, a fresh study has found.
The industry holds more than £88 billion ($110 billion) in bonds and equities issued by fossil fuel companies, according to a report published Wednesday by Make My Money Matter, a climate finance campaign co-founded by Love Actually director, Richard Curtis. That’s roughly 10 times as much as UK pension funds hold in listed FTSE 350 clean energy stocks, it said.
To reach net zero emissions by 2050 and prevent catastrophic overheating, the investment industry needs to allocate four times as much capital to renewable energy as to fossil fuels by the end of this decade, according to an analysis by BloombergNEF. And the International Energy Agency has made clear that halting new fossil fuel expansion is the only way to reach the 1.5C goal.
“As a result, we believe that ongoing investments in fossil fuel companies by the UK pensions industry – without a serious, time-bound and co-ordinated escalation in how investors use their stewardship role – represents a ticking time bomb for both our pensions and the planet,” the authors of the report wrote.
Specifically, Make My Money Matter is urging pension funds to get the fossil fuel companies they hold to rule out new oil and gas expansion, in line with a 1.5C trajectory. Funds should also vote against companies that continue to expand their fossil fuel business. If companies can’t live up to these criteria, public divestment “within set timeframes” should be the next step, according to the authors.
The Pensions and Lifetime Savings Association is “committed to working with members to help them achieve their net zero goals,” Joe Dabrowski, PLSA’s deputy director of policy, said in an emailed comment. “Pension schemes have a significant interest in ensuring that the companies they invest in are fully prepared for a lower carbon future” and can use their votes as shareholders to that end, he said.
He also called on the government to establish clearer guidelines for the industry.
Some firms are already divesting. Last week, the Church of England Pensions Board said it was blacklisting all oil and gas assets, a move that entailed offloading its stake in Shell Plc. That followed an announcement by the oil major that it was stepping up spending on fossil fuels and limiting investment in renewables to projects.
A separate Church investing body, the Church Commissioners for England, made a similar announcement. The two investors represent a combined $17 billion in assets.
The broader UK pensions industry, which manages about $3.7 trillion, remains heavily exposed to Shell, however, the report found. About 70% of the funds analyzed said their biggest holdings included Shell and 60% held BP shares among their top picks, while none had renewable energy stocks among their leading selections.
Continued investment in a growing fossil-fuel industry adds to the risk of “a disorderly transition,” the authors of the report said.
A separate study, published by five nonprofit organizations including Reclaim Finance, found that the 30 biggest asset managers hold at least $3.5 billion in newly issued bonds from companies actively engaged in fossil fuel expansion.
In total, the firms analyzed held almost $600 billion in bonds and stocks in the biggest developers as of January, according to the report. Researchers also noted that the figures likely underestimate actual holdings because asset managers don’t always disclose everything they own.
The holdings reflect unsuccessful efforts to engage with fossil fuel companies, according to the report. It singled out Climate Action 100+, a $68 trillion investor group with a stated goal of working with companies to help them transition to low-carbon business models.
“After five years of intensive dialogue by investors from the CA100+ initiative, only 20% of the companies from the coal mining and oil and gas sectors that have been engaged have even set an ambition to achieve net zero emissions by 2050,” the nonprofits said.
British Columbia Pension Grabs ‘Brilliant’ Private Credit Yields
Paula Sambo
Tue, June 27, 2023
(Bloomberg) -- British Columbia Investment Management Corp. deployed almost C$5 billion ($3.8 billion) in private credit investments in the past fiscal year and is seeing more opportunities in credit markets going forward.
“Looking at banks and their capital constraints, the syndicated market is very, very tight, so it leaves a lot of room for investors like us to be lending out,” Ramy Rayes, executive vice-president of investment strategy and risk, said in an interview. “And yields are just absolutely brilliant right now in the private credit space.”
The Victoria, British Columbia-based fund allocated C$4.7 billion toward private debt during the fiscal year ended March 31, bringing total investments to C$13.5 billion, the most since it first began investing in the asset class five years ago, Rayes said. The asset class gained 4.6% during the period, BCI said in its earnings statement Tuesday.
Right now, the best opportunities remain in fixed income, he said. “Even on the corporate bond side, traditional corporate bonds, whether investment grade or high yield, there’s good opportunities. On the real estate debt side, we’re seeing a bit of the same,” Rayes said.
BCI, which invests the retirement savings of British Columbia’s public sector workers, returned 3.5% for the year ended March 31, compared to a 0.3% increase generated by its own internal benchmark, the fund said in the statement. Net assets advanced to C$215 billion.
BCI generated better returns than the Canada Pension Plan Investment Board, which returned 1.3% during the period ended March 31 as declines in equity and fixed income markets eroded the benefits of a weaker Canadian dollar. Its results trailed those of Canadian pension manager Public Sector Pension Investment Board, which posted a 4.4% return for its most recent fiscal year, with double-digit returns in credit and infrastructure. Chief Executive Officer Deborah Orida in an interview said she sees private credit markets as attractive amid the economic slowdown and persistent inflation, as banks retreat from lending.
Prepared for ‘Storm’
BCI’s results were boosted by a “very defensive” selection of assets, Rayes said. “We started positioning our portfolio a few years back for a storm, not knowing exactly what the storm was going to be,” he said. “We raised liquidity at the end of 2021, we have quite a bit of alternative exposure, private markets.”
Private equity, infrastructure and renewable resources were large contributors to the gains, BCI said in the statement. The pension fund held C$28.3 billion in private equity assets, up 4.7% from the prior fiscal year. Infrastructure and renewable resource investments grew 9.2% to C$22.3 billion.
The fund exited some of its key assets in private equity and took advantage of strong valuations, selling about C$5 billion during the fiscal year, he said.
The pension fund sees signs of stress, as some of the institutional investors it usually partners with on bigger deals have already invested more than what they had targeted.
“In private market particularly it’s not easy to sell and if you want to rebalance, you got to sell at a price that you may not be comfortable with,” he said. “We’re actually seeking opportunities, but right now there’s not a lot of partners at the table trying to make transactions and we don’t typically transact on our own.”
British Columbia Pension Mulls $2 Billion PE Asset Sale
Paula Sambo, Layan Odeh and Hema Parmar
Tue, June 27, 2023
(Bloomberg) -- British Columbia Investment Management Corp. is mulling the sale of $2 billion in private equity assets in the secondary market to raise capital for other investments, according to people familiar with the matter.
The pension fund is close to finalizing the sale of some of its Europe-focused investments and is in the middle of negotiations to reduce some of its US positions, one of the people said, who asked not to be identified due to the confidentiality of the matter.
The primary goal is to rebalance BCI’s portfolio and free up cash from investments through funds to take advantage of potential direct co-investment opportunities, this person said.
A spokesperson for the Victoria, British Columbia-based fund declined to comment.
Some institutional investors hit their allocation limits to private equity after last year’s rise in interest rates caused a swift correction in bonds and stocks. That forces them to weigh disposing of some private equity holdings to create room for new ones. Public pensions saw their share of those secondary-market trades increase 9 percentage points globally — or nearly $2 billion — compared with 2021, as they adjust their portfolios, according to Campbell Lutyens & Co.
BCI, which invests the retirement savings of British Columbia’s public sector workers, returned 3.5% for the year ended March 31, compared to a 0.3% increase generated by its own internal benchmark, the fund said in the statement Tuesday. Net assets advanced to C$215 billion ($163.4 billion).
Private equity, infrastructure and renewable resources were large contributors to the gains, BCI said in the statement. The pension fund held C$28.3 billion in private equity assets, up 4.7% from the prior fiscal year.
The fund exited some of its key assets in private equity and took advantage of strong valuations, selling about C$5 billion during the last fiscal year, Ramy Rayes, executive vice-president of investment strategy and risk, said in an interview.
The Canada Pension Plan Investment Board is also weighing the sale of $3 billion of private assets in the secondary market, Bloomberg reported earlier this month. Caisse de Depot et Placement du Quebec, the country’s second-biggest pension manager, sold $2 billion of private investments on the secondary market in 2022 and is open to another transaction of a similar size this year, one person said.
Paula Sambo
Tue, June 27, 2023
(Bloomberg) -- British Columbia Investment Management Corp. deployed almost C$5 billion ($3.8 billion) in private credit investments in the past fiscal year and is seeing more opportunities in credit markets going forward.
“Looking at banks and their capital constraints, the syndicated market is very, very tight, so it leaves a lot of room for investors like us to be lending out,” Ramy Rayes, executive vice-president of investment strategy and risk, said in an interview. “And yields are just absolutely brilliant right now in the private credit space.”
The Victoria, British Columbia-based fund allocated C$4.7 billion toward private debt during the fiscal year ended March 31, bringing total investments to C$13.5 billion, the most since it first began investing in the asset class five years ago, Rayes said. The asset class gained 4.6% during the period, BCI said in its earnings statement Tuesday.
Right now, the best opportunities remain in fixed income, he said. “Even on the corporate bond side, traditional corporate bonds, whether investment grade or high yield, there’s good opportunities. On the real estate debt side, we’re seeing a bit of the same,” Rayes said.
BCI, which invests the retirement savings of British Columbia’s public sector workers, returned 3.5% for the year ended March 31, compared to a 0.3% increase generated by its own internal benchmark, the fund said in the statement. Net assets advanced to C$215 billion.
BCI generated better returns than the Canada Pension Plan Investment Board, which returned 1.3% during the period ended March 31 as declines in equity and fixed income markets eroded the benefits of a weaker Canadian dollar. Its results trailed those of Canadian pension manager Public Sector Pension Investment Board, which posted a 4.4% return for its most recent fiscal year, with double-digit returns in credit and infrastructure. Chief Executive Officer Deborah Orida in an interview said she sees private credit markets as attractive amid the economic slowdown and persistent inflation, as banks retreat from lending.
Prepared for ‘Storm’
BCI’s results were boosted by a “very defensive” selection of assets, Rayes said. “We started positioning our portfolio a few years back for a storm, not knowing exactly what the storm was going to be,” he said. “We raised liquidity at the end of 2021, we have quite a bit of alternative exposure, private markets.”
Private equity, infrastructure and renewable resources were large contributors to the gains, BCI said in the statement. The pension fund held C$28.3 billion in private equity assets, up 4.7% from the prior fiscal year. Infrastructure and renewable resource investments grew 9.2% to C$22.3 billion.
The fund exited some of its key assets in private equity and took advantage of strong valuations, selling about C$5 billion during the fiscal year, he said.
The pension fund sees signs of stress, as some of the institutional investors it usually partners with on bigger deals have already invested more than what they had targeted.
“In private market particularly it’s not easy to sell and if you want to rebalance, you got to sell at a price that you may not be comfortable with,” he said. “We’re actually seeking opportunities, but right now there’s not a lot of partners at the table trying to make transactions and we don’t typically transact on our own.”
British Columbia Pension Mulls $2 Billion PE Asset Sale
Paula Sambo, Layan Odeh and Hema Parmar
Tue, June 27, 2023
(Bloomberg) -- British Columbia Investment Management Corp. is mulling the sale of $2 billion in private equity assets in the secondary market to raise capital for other investments, according to people familiar with the matter.
The pension fund is close to finalizing the sale of some of its Europe-focused investments and is in the middle of negotiations to reduce some of its US positions, one of the people said, who asked not to be identified due to the confidentiality of the matter.
The primary goal is to rebalance BCI’s portfolio and free up cash from investments through funds to take advantage of potential direct co-investment opportunities, this person said.
A spokesperson for the Victoria, British Columbia-based fund declined to comment.
Some institutional investors hit their allocation limits to private equity after last year’s rise in interest rates caused a swift correction in bonds and stocks. That forces them to weigh disposing of some private equity holdings to create room for new ones. Public pensions saw their share of those secondary-market trades increase 9 percentage points globally — or nearly $2 billion — compared with 2021, as they adjust their portfolios, according to Campbell Lutyens & Co.
BCI, which invests the retirement savings of British Columbia’s public sector workers, returned 3.5% for the year ended March 31, compared to a 0.3% increase generated by its own internal benchmark, the fund said in the statement Tuesday. Net assets advanced to C$215 billion ($163.4 billion).
Private equity, infrastructure and renewable resources were large contributors to the gains, BCI said in the statement. The pension fund held C$28.3 billion in private equity assets, up 4.7% from the prior fiscal year.
The fund exited some of its key assets in private equity and took advantage of strong valuations, selling about C$5 billion during the last fiscal year, Ramy Rayes, executive vice-president of investment strategy and risk, said in an interview.
The Canada Pension Plan Investment Board is also weighing the sale of $3 billion of private assets in the secondary market, Bloomberg reported earlier this month. Caisse de Depot et Placement du Quebec, the country’s second-biggest pension manager, sold $2 billion of private investments on the secondary market in 2022 and is open to another transaction of a similar size this year, one person said.
Apple fails to end lawsuit over CEO Tim Cook's China sales comment
FILE PHOTO: An Apple logo hangs above the entrance to the Apple store on 5th Avenue in the Manhattan borough of New York City
By Jonathan Stempel
FILE PHOTO: An Apple logo hangs above the entrance to the Apple store on 5th Avenue in the Manhattan borough of New York City
By Jonathan Stempel
Tue, June 27, 2023
(Reuters) -A U.S. judge has rejected Apple's bid to throw out a class-action lawsuit that accused Chief Executive Tim Cook of defrauding shareholders by concealing falling demand for iPhones in China.
U.S. District Judge Yvonne Gonzalez Rogers' decision late Monday night clears the way for shareholders led by a British pension fund to sue over a one-day plunge that wiped out $74 billion of Apple's market value.
The lawsuit stemmed from Cook's comment on a Nov. 1, 2018, analyst call that while Apple faced sales pressure in markets such as Brazil, India, Russia and Turkey, where currencies had weakened, "I would not put China in that category."
Apple told suppliers a few days later to curb production, and on Jan. 2, 2019, unexpectedly slashed its quarterly revenue forecast by up to $9 billion, blaming U.S.-China trade tensions.
The lowered revenue forecast was Apple's first since the iPhone's launch in 2007, and the Cupertino, California-based company's shares fell 10% the next day.
Judge Rogers, based in Oakland, California, said jurors could reasonably infer that Cook was discussing Apple's sales outlook in China, not past performance or the impact of currency changes.
The judge also said that prior to Cook's comment, Apple knew China's economy had been slowing and had data suggesting that demand could fall.
"A reasonable jury could find that failure to disclose these risks caused plaintiff's harm," Rogers wrote.
Apple and its lawyers did not respond on Tuesday to requests for comment.
Shawn Williams, a lawyer for the shareholders, said: "We are pleased with the ruling and look forward to presenting the facts to a jury."
The lead plaintiff is the Norfolk County Council as Administering Authority of the Norfolk Pension Fund, located in Norwich, England.
Apple's share price has approximately quintupled since January 2019, giving the company a market value near $3 trillion.
The case is In re Apple Inc Securities Litigation, U.S. District Court, Northern District of California, No. 19-02033.
(Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)
(Reuters) -A U.S. judge has rejected Apple's bid to throw out a class-action lawsuit that accused Chief Executive Tim Cook of defrauding shareholders by concealing falling demand for iPhones in China.
U.S. District Judge Yvonne Gonzalez Rogers' decision late Monday night clears the way for shareholders led by a British pension fund to sue over a one-day plunge that wiped out $74 billion of Apple's market value.
The lawsuit stemmed from Cook's comment on a Nov. 1, 2018, analyst call that while Apple faced sales pressure in markets such as Brazil, India, Russia and Turkey, where currencies had weakened, "I would not put China in that category."
Apple told suppliers a few days later to curb production, and on Jan. 2, 2019, unexpectedly slashed its quarterly revenue forecast by up to $9 billion, blaming U.S.-China trade tensions.
The lowered revenue forecast was Apple's first since the iPhone's launch in 2007, and the Cupertino, California-based company's shares fell 10% the next day.
Judge Rogers, based in Oakland, California, said jurors could reasonably infer that Cook was discussing Apple's sales outlook in China, not past performance or the impact of currency changes.
The judge also said that prior to Cook's comment, Apple knew China's economy had been slowing and had data suggesting that demand could fall.
"A reasonable jury could find that failure to disclose these risks caused plaintiff's harm," Rogers wrote.
Apple and its lawyers did not respond on Tuesday to requests for comment.
Shawn Williams, a lawyer for the shareholders, said: "We are pleased with the ruling and look forward to presenting the facts to a jury."
The lead plaintiff is the Norfolk County Council as Administering Authority of the Norfolk Pension Fund, located in Norwich, England.
Apple's share price has approximately quintupled since January 2019, giving the company a market value near $3 trillion.
The case is In re Apple Inc Securities Litigation, U.S. District Court, Northern District of California, No. 19-02033.
(Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)
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