Since first publishing the Plan in 2021 , Railpen has advanced across all core objectives including climate solutions, engagement, alignment and financed emissions.
The fast progress and updated Plan reaffirm Railpen’s commitment to achieving net zero emissions across its investment portfolio, and corporate footprint, by 2050 or sooner. This commitment is consistent with the goals of the Paris Agreement, the policy and legislated aims of the UK government, and the Intergovernmental Panel on Climate Change’s Special Report on Global Warming of 1.5°C temperature goal.
Net zero progress achieved to date
Tackling climate risk requires a collaborative approach, and Railpen remains on track to meet its alignment, engagement and portfolio emissions targets. Already, 74% of in-scope emissions are under engagement – beating the current target of 70%, which rises to 90% by 2030. Sectors with concentrations of companies that fall within the scope of engagement targets are: metals and mining, airlines, construction materials, electric utilities, food products, oil and gas and chemicals.
The cornerstone of Railpen's Net Zero Plan is engaging businesses in ‘material’ sectors to align to net zero by 2050 or sooner. Following the creation of asset class alignment plans for listed equities, corporate fixed income, and sovereign bond portfolios, 23% of assets are currently aligned to net zero, with the target of 100% in material sectors expected to be hit by 2040.
Moreover, portfolio emissions were 41% lower in 2024, surpassing Railpen’s goal to deliver a 25–30% reduction by 2025 and putting Railpen on course for a 50% reduction by 2030.
While systemic climate risks and global emissions continue to rise, Railpen recognises that meeting portfolio targets alone is not enough. The updated plan therefore deepens its focus on driving genuine, real world emissions reduction and sets out how the organisation will play its role in enabling long term change.
Railpen’s climate strategy is anchored around four core pillars. Together, these pillars provide a framework for managing climate risks, seizing opportunities, and ensuring the portfolio is aligned with the transition to a net zero economy.
Following the interim assessment results, Railpen has set out a series of actions and priorities to ensure positive progress against its targets:
- Risk management: embedding climate risk insights into investment decisions
- Apply risk management tools and measures that aim to quantify transition and physical risk across our portfolios and partner with leading organisations in the development and deployment of these tools. This will inform allocation and engagement activities to help focus engagements on the most material risks, and build appropriate resilience and adaptation responses.
- Policy engagement: helping to accelerate credible transition pathways
- Proactive and collaborative policy advocacy, alongside scrutinising the climate policy advocacy of investee companies, and seeking appropriate disclosure in line with the Global Standard on Responsible Climate Lobbying.
- Asset stewardship: Engaging priority assets to accelerate net-zero alignment
- Continued focus on adequate climate transition planning, implementation and oversight, with a particular focus on climate policy advocacy and accompanying disclosure
- Portfolio construction: Constructing portfolios that support transition and resilience
- Focus on unlocking private capital flows to climate solutions, particularly in the UK, given Railpen’s exposures and expertise. Railpen has deployed over £900m into UK energy infrastructure since 2019, acquired a 50% shareholding in AGR Power (a leading London-based renewable energy and sustainable infrastructure developer), as well as funded an innovative private equity solutions platform focused on the ‘new energy economy’.
Commenting on the announcement, Michael Marshall, Director of Investment Risk and Sustainable Ownership at Railpen, said: “We are committed to securing our members’ future and recognise the critical importance of tackling climate change alongside other systemic sustainability challenges.
Since publishing our first Net Zero Plan in 2021, we have made positive progress, demonstrating that acting on these risks and delivering returns is often intrinsically linked. A long-term investment horizon exposes pension schemes to such risks, and how capital is allocated shapes their impact. Railpen has a responsibility to make assets resilient to systemic threats while positioning portfolios for long-term opportunities, contributing positively to the world our members will retire into.”
Adam Gillett, Head of Sustainable Investment and Co-Head of Sustainable Ownership at Railpen
“Our long-term investment horizon exposes members’ savings to the impacts of climate change. Therefore, we have a dual responsibility: to make our investments resilient to this threat and to use our influence and scale to effect positive change in the world.
While we are on track to meet our interim targets in 2025 and 2030, this is only an early assessment of what is a much longer-term plan. Critically however, systemic climate risk has continued to rise significantly since publishing our first Net Zero Plan, and global emissions also continue to rise. Looking ahead, we are deepening our focus on achieving real-world emissions reduction, and on how Railpen can best play its role in driving this change.”
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