Designing Climate Transition Benchmarks for Equity Investments

This case study presents the collaboration between Phoenix Group and FTSE Russell to design climate transition equity benchmarks aimed at supporting decarbonisation targets. It outlines Phoenix Group's commitment to managing climate risks and maximising opportunities for its customers, with a focus on establishing Climate Aligned equity benchmarks that align with their sustainability principles. The FTSE Phoenix Climate Aligned Index Series was developed to decarbonise and re-weight investment portfolios towards assets with forward-looking climate commitments. The benchmarks aim to reduce portfolio carbon intensity by 7% annually and include a custom exclusion policy to remove companies not aligned with Phoenix's sustainability goals. The study evaluates the implementation of these benchmarks in the context of the IIGCC’s Net Zero Investment Framework, highlighting the practical application of net zero investment principles. The case study also details the expected outcomes and allocations associated with the indices, demonstrating Phoenix Group's proactive approach to achieving net zero across its investment portfolio by 2050.