ILIM takes another step on sustainable investment journey

Head of Responsible Investment Kathy Ryan outlines finance firm’s moves to progress the climate agenda

Kathy Ryan has witnessed first-hand the culture shift in the financial world, with companies now taking account of environmental, social and governance concerns in their day-to-day operations.

One such firm, Irish Life Investment Managers (ILIM), deals with assets valued in excess of €100billion for a wide array of clients including insurance companies, wealth managers, pension schemes and sovereign wealth funds across Europe and North America. It is also one of the leading property investors in Ireland. As of December 2021, ILIM had over €40 billion in responsibly managed assets, representing 40% of total assets under management.

Kathy, the Head of Responsible Investment at ILIM, is spearheading ILIM’s sustainable investment journey, which includes the launch of its Climate Action Pledge in October 2021.

“Our Climate Action Pledge sits within our ongoing commitment to Sustainable Investment and sets out our action plan to deliver on the climate agenda,” she says.

“One of those areas we’re focused on is integrating climate alignment into portfolio construction. We have integrated a ‘decarbonisation tilt’ into our proprietary assets, and expanded our sustainable solution set by launching funds aligned with the climate transition”

“Another area we’re focused on is using stewardship to accelerate the climate agenda in the companies in which we invest. It’s an active-ownership approach that promotes better corporate behaviour in terms of sustainability, meaning we use engagement and our voting rights to ensure firms are mitigating climate risks and embracing the opportunities of the transition to a low-carbon economy,” Kathy adds.

Supporting TCFD

In 2020, ILIM committed to supporting the Task Force on Climate-related Financial Disclosures (TCFD), an international scheme established in 2015 to help investors understand their exposure to climate risk. Under the TCFD framework, participating companies publish reports on climate-related risks and opportunities as part of a wider pledge to increase transparency around climate data.

Kathy believes that joining the initiative was a “natural step” for ILIM.

“We had been aware of the TCFD initiative for a number of years and, as the company strategy around climate change evolved, it was a natural step to join the initiative,” says Kathy, adding that buy-in from multiple departments, coupled with a sprinkling of outside expertise, was vital to getting the project up and running.

“We partnered with the Climate Solutions team at Institutional Shareholder Services to develop our first TCFD report. It was a big project involving a huge multidisciplinary effort from a number of internal teams.”

“We collected the data to help us assess the future trajectory of the carbon emissions of ILIM’s investment portfolios, and from that we established a baseline for implementing climate targets going forward.

“It perhaps sounds more straightforward than it was. The biggest challenges we faced were raising awareness of why this was important among our various teams and departments, and then finding the data on which we based our climate assessment.”

Meeting training needs

TCFD is vital to meeting ILIM’s strategic objections, according to Kathy, with decarbonisation a key strategic priority the company.

“It is the most standardised framework in this area and, what’s more, it was produced by and for the financial industry. It is key for us to consider the TCFD recommendations to advance the climate agenda within the company and further our advance to net zero emissions,” says Kathy, who acknowledges the support of Sustainable Finance Ireland in educating the company’s staff.

“We have been an active partner of Sustainable Finance Ireland. We had the opportunity to conduct a TCFD Masterclass as part of the Climate Finance Week 2021, and members of our responsible investment and risk teams are taking part in the TCFD training sessions organised by Skillnet Ireland. These sessions are very helpful for us to keep informed on best practice around TCFD disclosures,” she adds.