Wellcome pledges £29bn investment fund will be carbon zero by 2050
We’ll send you a myFT Daily Digest email rounding up the latest ESG investing news every morning.
Wellcome, the £29bn endowment foundation, has pledged that its vast portfolio of investments in shares, hedge funds, private equity and property will become carbon net zero before 2050, the largest such pledge by a UK charity.
Wellcome, one of the world’s biggest charitable donors, will work with fund managers that oversee assets on its behalf, as well as the companies in which it holds a direct investment to encourage net zero strategies.
First steps will include devising standard measurements across all its assets, given a lack of data to gauge what its hedge fund and private equity fund managers are doing to meet net zero objectives in their portfolios and co-investments.
Wellcome said it would regularly evaluate each of its assets and report annually on its investment portfolio’s progress towards net zero targets.
Nick Moakes, who runs the trust’s investment portfolio, said the fund was not looking to sell any assets given that many companies in which it has stakes, such as energy giants BP and Shell, had already announced their own net zero targets.
Moakes said: “If we want to make a genuine difference then it’s not about making a few headlines on selling off assets. We want to start to lead the engagement with private equity and hedge fund partners, and move them to commit to a zero carbon future.”
The group has a £14.6bn portfolio of public equities, held either directly or through fund managers.
It also invests £3.7bn through hedge funds and £9.4bn in private equity to support its science and research activities. Wellcome will encourage the managers and companies in which it invests to follow recommendations set by the Task Force on Climate-related Financial Disclosures, the global standard for climate-related disclosure.
It will also start to measure and improve the carbon position of its properties, which Moakes said was the biggest challenge given the protected status of some of the older buildings it owned, in South Kensington in London, for example.
Wellcome’s decision comes as many other endowments, asset owners and fund managers are also making net zero pledges, as attention focuses on the role big investors can play in reducing global carbon emissions. Last year, Cambridge university’s £3.5bn endowment fund said it would aim for net zero greenhouse gas emissions from any company in which it invests by 2038.
More than 40 pension funds, endowments and other big investors, which collectively oversee $6.6tn in assets, have also signed the UN-convened Net-Zero Asset Owners Alliance, a group whose members have pledged to transition their investment portfolios to net zero by 2050. This includes the David Rockefeller Fund and the Church Commissioners for England, which oversees investments for the Church of England.
Where climate change meets business, markets and politics. Explore the FT’s coverage here.
Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here
Big asset managers have also promised to become greener, with Vanguard, BlackRock and Aberdeen Standard Investments all backing the Net Zero Asset Managers initiative. It was launched last December, with signatories committing to set targets to cut emissions by 2030 and to achieve net zero by 2050.
Julia Gillard, former Australian prime minister and chair of Wellcome, said that as “a major investor we have both a responsibility and an opportunity to encourage businesses to focus on decarbonisation”.
“Many companies are aware of the need to lower their carbon emissions,” she added. “It’s our role as an investor to prompt those who have not started making changes to do so urgently, while encouraging those who are doing so to go further.”
An external analysis showed that the carbon footprint of Wellcome’s public equity holdings was less than 30 per cent of the relevant global benchmark, with relatively little exposure to the most carbon intensive businesses.
Get alerts on ESG investing when a new story is published